Should building societies lend to BTL borrowers?
The subject has had an interesting airing in The Guardian, where respected writer Patrick Collinson said he was surprised that the issue has not been raised at any building society annual meeting.
In a thought-provoking piece, the Guardian Money editor is not unsympathetic to landlords, saying it is not surprising that people should want to invest in property for their pensions, given that a cash ISA now yields a pathetic 1.7% average interest.
However, he also argues that for every property bought by a buy-to-let investor, one disappears off the radar as far as first-time buyers are concerned. Furthermore, the buy-to-let purchaser is sentencing someone else to renting.
Building societies are, of course, mutuals, supported by members for members (ie, ‘money in’ more or less equals ‘money out’).
Aside from all the usual arguments that building societies are really there to help home ownership, should a mutual even be thinking of lending to a sector where mortgages are unregulated?
However, like any other organisation, building societies are interested in the bottom line – and buy-to-let mortgages command higher rates and fees than residential loans.
Collinson wrote his article after a reader in Yorkshire said he was keen to put his money into a building society that lends only for owner occupation rather than funding landlords’ investments.
If there are such mutuals, they must be thin on the ground, says Collinson. The Building Societies Association says virtually all its members offer buy-to-let mortgages.
The piece is also worth reading for readers’ reactions. And, of course, we’d be interested in yours.