Let-to-buy 'highlights difficult market'

A property expert has claimed that the number of first-time buyers turning to let-to-buy mortgages is proof of the difficulty now faced by youngsters hoping to get a foot on the property ladder.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said that this type of loan was becoming increasingly popular but was also putting many homebuyers at financial risk.

A let-to-buy mortgage sees first time buyer get onto the property market by using the rental yield from one property to pay for the mortgage on another – in other words they are letting in order to buy.

Profits made on this first property should then allow them to get onto the ladder as a home owner but this can be risky as it is heavily reliant on the rental market remaining buoyant.

"These just show how difficult it is for some people to enter the housing market…because people are willing to take the risk of buying a property through renting it out," Mr Williams said.

"There are a number of difficulties with let-to-buy in that it assumes an ongoing rental market. Although the prospect of rentals remain strong, that won't be true in every single locality."

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