The challenges facing property investors – The Property Chronicle
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The challenges facing property investors

The Analyst

It is generally perceived that as you build up your credit history, financial portfolio and investment experience, you’ll be better positioned to access and successfully receive new forms of debt. The reality, however, is far more complex. The wealthier someone is, the more complicated their finances become. 

Looking at the current climate, the COVID-19 pandemic presents a new host of challenges for UK property investors. While the UK Government has been routinely announcing new measures to support businesses and consumers, it is still not known just how and when the virus will be contained. This uncertainty has resulted in investors and banks slowly becoming more risk averse.  

On 19 March, the Bank of England took the decision to cut interest rates to an historic low of 0.1%. With the rate of interest repayments becoming lower, one would naturally anticipate a surge in applications for mortgages. Afterall, property is traditionally positioned as a safe-haven asset able to maintain its value and recover from volatile trading periods. However, this assumption overlooks some of the inherent challenges faced when attempting to arrange a mortgage. 

The mortgage struggles of property investors

To understand the challenges faced by property investors, Butterfield Mortgages Limited (BML) surveyed over 750 UK individuals who own three or more properties. The research aimed to uncover the overall experiences of seasoned property investors when applying for a mortgage. 

Of those surveyed by BML, 72% felt the process of applying for a mortgage had become significantly more difficult since 2015. The idea that high net worth (HNW) individuals or sophisticated property investors are being denied mortgages may seem strange, but it represents a predictable consequence of the tightening regulations imposed on the sector as a result of the 2008 global financial crisis.

The Analyst

About Alpa Bhakta

Alpa Bhakta

Alpa Bhakta is Chief Executive Officer of Butterfield Mortgages Ltd. With more than 20 years’ experience in the world of high net worth (HNW) property finance in the UK, Alpa is uniquely well-placed to oversee BML as a stand-alone mortgage lender, with a focus on prime property lending. Before joining Butterfield, Alpa headed the private property finance team at BNP Paribas Fortis, following positions at Credit Agricole Indosuez private bank and NatWest. Her expertise in this field is unrivalled and makes her a much-respected senior figure in the industry. She has recently been short-listed for the 2018 Citywealth Powerwomen awards.

Articles by Alpa Bhakta

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