Has the credit crunch been good or bad for buy to let landlords?

One of my favourite sayings is that optimists see the glass as half full and look for the opportunity in every difficulty, pessimists see the glass as half empty and look for the difficulty in every opportunity and entrepreneurs are opportunists who take positive action regardless of market conditions, taste the contents of the glass and quench their thirst by drinking the contents if it tastes OK.  The fourth group are of course the economists.  They analyse the problem for a couple of years before reaching their conclusion that the glass was too big.

The landlords I speak to fall into three distinct camps;

1. those who are sitting on large chunks of cash and carefully snapping up bargains,
2. those who are stuck in a rut because they can’t afford to sell, they can’t refinance and they are worried sick about interest rate rises and
3. those who are oblivious to what might happen as we pull out of recession or are simply burying their head in the sand.

I’d very much like to get your views on what’s been good about the credit crunch and what’s not been so good for buy to let landlords.

I’ve started a list below of some of the good and the not so good effects of the credit crunch.  I could go on and on, but I’d really like you to share your thoughts in the “Leave a reply” box below.

What’s been good?

• 90% reduction in bank base rate from 5% to 0.5% is great for cashflow to improve properties and build cash reserves
• First time buyers are struggling to get mortgages, so rental demand is up
• Property prices have fallen so we can now buy similar properties for less money
• Yields on new purchases have improved due to rental demand and falling prices
• There are less inspired amateurs competing to buy as they find it more difficult to get mortgages
• Common sense, sustainable lending has returned

What’s been bad?

• Interest rate margins are higher on new borrowing (could be good though if it stops lenders going out of business?)
• Deposits required are higher (or is this just common sense lending?)
• Lenders fees are much higher (I can’t reconcile that one other than the law of supply vs demand)
• Lending criteria is tougher (again this might be read by some as good news)
• Less lenders are competing for new business (this has to be bad, monopolies and lack of competition always are)
• There are still far too many self styled guru’s and con artists around (do we need more regulation or to enforce those already in place?)

OK, so this might not be a completely balanced perspective but what would you expect from an entreprenuer who looks for the opportunity in every difficulty and takes action based on prevailing market conditions?

Do you agree with the points I’ve made or do you disagree? And why?

What would you like to add?

What’s your conclusion? Has the credit crunch been a buy to let landlords nightmare or a blessing?

Do you know this landlord?

What do you think the future holds for landlords?

10 years from now, what percentage of landlords do you think will believe they made the right choice to invest into property?

I look forward to reading your comments.

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