As more and more Brits turn to the rental sector in times of tight credit, buy to let mortgage products are drying up which could spell a UK housing disaster.
According to research from Moneysupermarket.com, five per cent more people are renting properties now than in October last year. As the number of Brits forced to rent increases, there has been a 40 per cent drop in the number of buy to let mortgage
products available, suggesting that the rental housing market could soon be bare.
The UK is in the midst of a credit crunch, largely caused by sub-prime mortgage lending in the US. Consequentially, the UK housing and mortgage markets are suffering as banks become reluctant to offer credit to each other or to consumers.
The shortage of credit seems to have hit the buy to let mortgage
market hard, which, according to Moneysupermarket.com could cause chaos on the UK housing market. Increased rental activity coupled with decreased buy to let mortgage products could lead to the serious issue of a housing shortage.
Ironically, the rest of the housing market is finding itself inundated with properties as market activity dwindles due to overpriced properties, a shortage of credit and an increase in the deposits and fees required.
The research showed that one in 10 people questioned said they had planned to get a mortgage but could no longer afford it or were discouraged as a result of high deposits and fees.
Louise Cuming, head of mortgages at Moneysupermarket.com, said: "You would imagine this would mean the buy to let market would start to grow. However, our research shows the number of buy to let products has decreased from 4025 to 674 in just one year, with nearly 600 of these products removed since March 31st.
"As stringent lending pushes people into the buy to let market, the decrease in the number of buy to let mortgages becomes increasingly alarming. I fear we will soon see many people unable to buy or rent – the question is, where do they go from there?" she concluded.