Britain’s lenders are turning their backs on first-time buyers and other traditional borrowers, and granting mortgages to landlords instead amid signs of a new buy-to-let bubble.

Northern Rock this week joined an expanding list of lenders, including a Lloyds Banking Group subsidiary, pushing out new buy-to-let loans on better terms, while Santander is also preparing to enter the market.

In an extraordinary admission, Nationwide – one of the biggest mortgage lenders – says it would rather give mortgages to landlords than first-time buyers. Matthew Wyles, the society’s “distribution director”, told an industry debate hosted by HSBC: “As a lender, we would rather lend 75% LTV [loan-to-value] on a buy-to-let mortgage to an experienced buy-to-let investor, than to a first-time buyer at 95% LTV.”

Figures from the data provider Moneyfacts show that the number of buy-to-let loans available to landlords has doubled over the past year, with the pace of new launches accelerating in recent weeks. According to its research, there are 434 different buy-to-let loan offers currently available, compared with 215 at the start of 2010 and 330 just a month ago.

Behind the dash back into buy-to-let is the rise in rents in a market fuelled by frustrated first-time buyers who can’t find the finance for a home of their own.

This week, LSL Property Services , Britain’s biggest network of letting agents, said that rents were “powering ahead” in many parts of the country, especially London.

David Newnes of LSL, which owns Your Move and Reeds Rains, says: “Landlords are seeing demand for their properties go from strength to strength. First-time buyers simply can’t afford the average £25,000 deposit required and, as a result, most are remaining in rented accommodation for nearly a decade.

“The growing demand continues to outstrip supply, and this is pushing rents upwards beyond the rate of inflation, and well above wage rises.”

Big lenders are also easing constraints that were put on borrowing during the credit crunch. According to the Council of Mortgage Lenders (CML), £3bn worth of loans were granted to landlords in the last quarter of 2010 – substantially below the peak levels of 2006 and 2007, but up 42% over the year.

The CML added that the average loan ceiling for investors – the maximum amount an individual landlord can borrow from a single lender – has risen from £2m to £2.5m over the past year. Separately, maximum LTVs on buy-to-let mortgages have edged up in recent months towards 85%.

State-owned Northern Rock , which this week cut rates on buy-to-let loans by 0.4%, will offer landlords mortgages on up to 10 properties, worth up to £3m. Landlords need prove an income of only £25,000 a year to start qualifying for buy-to-let loans. Meanwhile BM Solutions , a division of Lloyds, is promising a “one-minute mortgage” deal for landlords.

Some of the specialist lenders that withdrew from the market during the credit crunch have now reopened for business. A name synonymous with the pre-2008 boom, Mortgage Trust , part of the Paragon Group, this week returned to the market three years after closing its doors. It promises cheap and simple mortgages for smaller landlords, starting at 3.99%, and what’s called “fast-track” underwriting through mortgage intermediaries.

Fast-track underwriting has a controversial recent history. In July last year, the Financial Services Authority (FSA) published proposals to ban fast-track and “self-cert” mortgages, effectively granted without stringent checks on an applicant’s income and ability to repay. It also expressed concerns about interest-only mortgages.

But unlike conventional residential mortgages, buy-to-let deals are not subject to regulation by the FSA. Interest-only lending to landlords is commonplace, and lenders are free to offer fast-tracking. In a note this week hailing the return of Mortgage Trust, Legal & General’s Mortgage Club told landlords that the loans would be subject only to “fast-track, credit score-based underwriting”.

The revival in buy-to-let has angered critics who argue that lending to landlords has prevented millions from buying a home. Matt Griffiths of the campaign group PricedOut says: “For anyone concerned about maintaining widespread home ownership, this is deeply worrying. Many young people are now being effectively disenfranchised from the property-owning democracy by buy-to-let investors. Buy-to-let benefits from both cheaper mortgage finance (via the use of interest-only mortgages) and tax breaks on interest payments, which means they can easily outgun any first-time buyer for the purchase of lower-end properties.

“This has been exacerbated by the growing tendency of first-time buyers to use repayment mortgages (over 90% did in December 2009), and the higher deposit barrier required by cautious mainstream lenders. This is deeply ironic, as buy-to-let activity has been much riskier and more volatile than lending for normal homebuying.”

Will the re-emergence of buy-to-let be a warning light to regulators and the Bank of England? Eight of the top nine UK buy-to-let lenders in 2007 have since been either rescued by the taxpayer, closed to further business or forced to undergo substantial retrenchment. PricedOut argues that, in the run-up to the financial crisis, buy-to-let disproportionally utilised the new financing opportunities created by investment bank securitisation deals, and was dominated by short-term and speculative behaviour. “It was the main conduit through which excessive credit availability has been transmitted and amplified into the UK housing market,” says Griffiths.

PricedOut wants buy-to-let to be regulated, but recent government intervention has favoured landlords. In the last budget, the chancellor unveiled a £560m tax giveaway on buy-to-let stamp duty bills.

Meanwhile tenants face an uphill struggle to save the large deposits needed to obtain a mortgage, as landlords push through rent rises much in excess of wage rises. LSL predicts that, at the current rate of increase, average monthly rents paid by tenants across Britain will hit £715 this time next year, and top £1,050 in London.

Property investment firm Assetz , one of the cheerleaders of the buy-to-let boom, said business had doubled over the past year and that landlords are fast replacing first-time buyers. Its chief executive, Stuart Law, told the industry magazine Mortgage Strategy this week that: “Lenders are making no secret of the fact that they would rather allocate the limited funds they do have to the lower-risk option of buy-to-let loans, with deposits of 25-40%, than first-time buyers loans with 90% LTVs . As a result, the buy-to-let sector is recovering at a remarkable rate.” Loans for landlords Buying to let Renting property First-time buyers Property Mortgages Housing market Patrick Collinson guardian.co.uk © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds

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London, England, United Kingdom (AHN) – Employment in Britain continues to be bleak amid reports of job cuts by a major British bank, a rise in jobless benefits claims and a forecast of more lay-offs.

On Wednesday, Lloyds Banking Group announced it would cut 4,500 more jobs. To be affected by the financial institution’s restructuring program are employees in the IT division. With the fresh round of lay-offs, the total number of Lloyds workers who have lost their jobs since the bank merged with HBOS in January 2009 is 22,000.

To worsen the situation, Lloyds may make more job cuts since the bank is only in the middle of a three-year integration program scheduled to end this year.

Of those who would lose their jobs in the latest cuts, 1,600 are permanent employees, 1,150 temporary and 1,750 contractual workers. About 90 percent of the permanent workers who would lose their jobs are from the HBOS sites in Edinburgh, Halifax, Leeds and Chester.

Trade union Unite criticized the job cuts because Lloyds reported a first half profit of $2.4 billion (1.6 billion pounds) and is still pursuing a cost-cutting program.

Unless the Lloyds workers soon find other jobs, they may join the ranks of jobless benefits claimants whose number rose by 5,300 in September. According to the Office of National Statistics, the rise in job benefits claims – the largest increase since January – brings the total number of claimants to 1.47 million.

But the worse is yet to come, consultant PricewaterhouseCoopers predicted in a study. According to the firm’s research, about 500,000 Britons in the private sector could lose their jobs in the next four years because of the $124.5 billion (83 billion pounds) cut in public spending by the coalition government.

For the same period, the private sector is still expected to generate 1 million new jobs in the outsourced business services and social care sectors, but business services will lose 180,000 jobs and construction 100,000 jobs.

The study forecasts job sector losses in private and public sectors will reach 5 percent of the total workforce in Northern Ireland, 4 percent in Wales, Scotland and the North East, and a larger number in London and the Southeast.

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ERIC DANIELS, the American who announced on September 20th that he will retire as chief executive of Lloyds Banking Group next year, is an affable man. But it is fair to say that when he steps down—a surprisingly long time after several others who led Britain’s banks when the financial crisis struck—his legacy will be deeply contentious.

By one account, Mr Daniels took a cautious path for five years, before exploiting the crisis to pick up HBOS, a troubled mortgage lender, in a deal that left Lloyds as the world’s largest bank by loans at the end of last year. By another, when Mr Daniels bought HBOS in September 2008, he blew years of hard work. The purchase quickly led to an emergency bail-out: the state now owns 41% of Lloyds. And it created a firm that is so big, so undiversified and so dependent on borrowing, his critics argue, that it should be broken up again. “Lloyds”, predicts the boss of another big British bank, “won’t exist in a decade.” …

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However, the move is likely to cause 460 jobs to be lost, 360 of which are said to be full time positions.

Lloyds has been in talks about the changes with its unions, and added compulsory redundancies among counter staff was a “last resort”.

The business has 218 offices, 93 of which are franchise operations, but has continued to make losses despite efforts made by Lloyds Banking Group following the takeover of HBOS a year ago.

All 121 Halifax banking counters located in estate agents are set to close their doors early next year, and later rebranded as one of LSL’s existing brands.

LSL is the parent company of estate agency brands Your Move, Reeds Rains and Intercounty.

Lloyds said the decision to sell Halifax came after carrying out a strategic review, “which concluded that an estate agency operation is no longer integral to its business model”.

David Nicholson, managing director of Halifax Community Bank, said: “Halifax Estate Agency is a well established business and, following a strategic review, we believe that it is better able to grow outside the Group with a strong existing player in the market such as LSL Property Services.”

Ged Nichols, general secretary of union Accord, said: “We will be having early meetings with LSL to discuss their plans for the business and employees’ terms and conditions so that we can provide maximum support for Accord members who will be transferring to LSL’s employment.

Lloyds said all customers with mortgages or other services affected by the counter closures would receive a letter containing details of the changes and be given information regarding alternative locally placed banking facilities. Most of these locations either have a Lloyds TSB or Halifax branch within one mile.

“We have also made our view clear to Lloyds that the staff who currently work in the 121 branches with banking counters should have the opportunity to transfer to nearby bank branches. We believe that there is no need for compulsory redundancies.”

The sale has made LSL the second-largest estate agency operation in Britain. The firm was created after its counterpart Your Move was bought out of Norwich Union in 2004.

Simon Embley, LSL’s chief executive, said: “The purchase of Halifax Estate Agency heralds a significant step forward in the growth of LSL and its associated estate agency businesses. We now look forward to embracing the opportunities that this move presents to us and, at the same time, ensure the high standards and reputation HEA are renowned for are maintained and built upon in the future.”

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