Small Fish in a Big Pond of Buy-to-Let Mortgages
The small investors in any type of business venture are more than likely to be the ones at risk. Not only do they have the smallest amount of money to invest, but also, they have the least amount of money that they can afford to lose. The buy-to-let arena is no exception to this fact.
While the small investor’s choices have to be carefully thought out and wisely orchestrated, the threat of failure looms large in an atmosphere of tight lending policies and fluctuating profit margins. Currently, the small fish in the buy-to-let pond are already stretched to their limits with no end in sight.
The tightening of the requirements for obtaining new buy-to-let mortgages, impacts unfavorably on small investors. Not only are they not realizing a large enough profit with their current buy-to-let investment portfolio, but also, they cannot expand their portfolio with new holdings and an increase in profit income. Rents can only increase so much, but with rising living costs and no end in sight, many small investors are only waiting for the right time to bail out and find another pond to swim in.
So, what happens when the demand for rentals is also on the rise due to the tightening of first time home mortgage requirements as well? Exactly what you would expect happens. The big fish in the pond or those investors with larger portfolios and larger wallets continue to get bigger, taking over the buy-to-let pond and the properties in it.
|
