Buy-to-let property market: one million loans

Just as you thought the property market was closing, figures show a 23 per cent rise in buy-to-let mortgages, with more such loans accounting for 10.3 per cent of the mortgage market. Buy-to-let lending totalled £24.1 billion in the second half of 2007, according to the CML. "Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market," says Michael Coogan, CML director general.

The CML report also points out that lenders put an 85 per cent average maximum on the percentage of the value of the property that they were willing to advance. Much has been made recently of the 125 per cent mortgages that have been available on the market.

The CML announcement brings to mind observations made by Andreas Panayiotou in a rare interview with Real Business. Panayiotou has built a £715m fortune by investing in the buy-to-let market since his Cypriot parents arrived in the UK in 1959. (That’s roughly the same fortune as Paul McCartney!)

His secret: never selling. “From the start I did things different from everybody else. I only bought to let. I never sold up. I have never sold a property in my life. I keep a long-term view… “If you rent a property you get money coming in the moment the builders have left. Selling means waiting until you’ve got a buyer, which could take six months. Then there’s tax to pay on a sold building. I don’t pay that.”

Another tip for budding buy-to-let entrepreneurs: "I only borrow 55 per cent of the money to buy a property. Other property buyers will gear up to 90 per cent, which makes negative equity a problem for them.”

Click here to read the full interview with Andreas Panayiotou, founder of Ability Developments. Interview first published in 2005.

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