Buy-to-let lending falls as banks favour major investors
Nicholas Christofi, of Karis Capital, says banks now consider small and medium-sized investors a higher risk.
Bank lending to small and medium-sized property firms has fallen 14% in the last five years, new data reveals.
The overall loans total fell to £186billion in March, down from £216billion in March 2021, according to new research from Karis Capital, a specialist real estate debt and insurance advisory firm.
Less willing
Nicholas Christofi, CEO of Karis Capital (pictured), says: “Smaller property investors should look beyond banks to take advantage of falling property prices.
“The market is currently offering very attractive buying opportunities, but many smaller property investors are finding their usual lenders are less willing to lend.
“Our view is that if you want to get the most competitive finance then you need to look at all the lenders and not just the bigger banks.”
Higher risk
Karis Capital says that the shift in lending away from small investors is due to banks considering smaller property investors a higher risk.
Much of that lending has been redirected to large property investment businesses, whose borrowing from banks rose 20% to £375billion over the same period.
Meanwhile, the value of lending in the specialist mortgage market is estimated to grow 68% to £54 billion in 2029, up from £32 billion in 2023.
Christofi adds: “The boom in the UK bridging market and specialist mortgage market shows that alternative funding providers are willing to step in for smaller investors.”
Selling up
It has been reported that many buy-to-let landlords have been selling properties at reduced prices following the introduction of the Renters’ Rights Act in May.
“Specific events in the property market mean a significant number of property assets are currently being sold at reduced prices. That window of opportunity is unlikely to remain open indefinitely,” Christofi says.
