The average BTLer has a 21% mortgage and 500% rental cover at 5%

Apodemus

One aspect that the OP's statistics misses is that many BTL owners transfer debt/capital across from the mortgage on their own private residence. I don't know what the balance would be, but some increase the BTL loan (for the above mentioned tax reasons) and live mortgage-free in their own house, while others free-up capital by increasing their own mortgage (at lower interest rates) to invest in BTL property (or to reduce the BTL loan to a lower rate).

In practice, this is probably a shifting picture, even for individual BTL landlords but it needs to be part of the overall picture if you want to understand the indebtedness and returns on the BTL economy as a whole.

westernpromise

Apodemus wrote: »

One aspect that the OP's statistics misses is that many BTL owners transfer debt/capital across from the mortgage on their own private residence. I don't know what the balance would be

Exactly, you don't know, and nor does CML. How many is "many" and how would you know? However, it is clear that to do this hitherto would have been an economically irrational thing to do. If you increase the mortgage borrowings on your own house in order to fund a BTL, the interest on the equity withdrawal is not tax deductible against rental income, whereas if you increase the size of the BTL mortgage, it would be. So you are better off borrowing against the BTL, not your house; and if you did do the latter, the sooner you can transfer the borrowings back to the BTL to reduce the mortgage on your house, the better off you are.

It is thus likelier that the mortgage people extend to buy a BTL is the existing BTL mortgage itself. This is a strategy a number of BTL enthusiasts have advocated, and one that would be captured in the CML stats.

So still we have the same issue. Take a rented house worth £100k whose current landlord, one of these hyper-hyper-rare over-leveraged ones, is selling. Why would a lender want to advance 3.5 x salary to an FTB on £26k so s/he can buy it at 90% LTV, when they could instead lend 21% of LTV, at a higher interest rate, to the average landlord? If the idea is find someone to lend £90k to, and to have that secured on a house, why not lend the £90k to the landlord so he can buy four houses?

Something I find quite amusing about PropertyTribes and Property118 is that they are forever berating their readers about their failure to support their campaign against section 24, and about the lack of traction they are achieving in doing so. They assume that dozy landlords either aren't interested or aren't paying attention. It doesn't seem to have occurred to them that the lack of interest may instead accurately reflect the tiny, tiny number of people who will actually be materially affected.