TSB pilots buy-to-let mortgages as boom continues despite housing crisis

Critics say the popularity of buy-to-let makes it harder for first-time buyers to get on the ladder

Just 39 per cent of 25-45 year-olds own a home in London, which has the lowest rates of young homeowners in the country (Getty) (Getty Images)

Buy-to-let landlords have been unwittingly dragged into the election debate by both sides.

Labour, which wants to introduce three-year tenancies for renters, would cap landlords’ profits.

While the Conservatives have freed up pensions and announced plans to sell off social housing - great news for an older generation with pension money to invest.

Banks have spotted an opportunity to tempt would-be landlords with buy-to-let mortgages.

TSB is the latest. The bank, which has been bought by Spain's Sabadell, is piloting a buy-to-let proposition with mortgage broker London & Country ahead of a wider roll-out.

Critics have said the scheme will exacerbate the UK housing crisis as aspiring landlords snap up property to make a profit from tenants, pushing up prices. This makes it harder for would-be buyers to afford a home.

It’s a vicious circle: people can’t afford to buy, so rental demand goes up, which attracts rent-to-buy investors.

The number of people applying for a mortgage this year has fallen, according to figures from the Council of Mortgage Lenders. Loans to first time buyers were down 16 per cent in February compared to February last year.

Meanwhile buy-to-let loans were up 11 per cent in February compared to the same month last year.

The Telegraph reports that local authorities are reluctant to regulate against buy-to-let because local authorities depend on private landlords to provide housing – because there is no social housing alternative.

In the meantime its popularity among investors is on the rise. TSB will extend its buy-to-let pilot through a recently launched intermediary service, which allows customers to access the mortgage through other brokers, later this year.