Hips have put people off buy-to-let mortgages

Published: November 13, 2007

An industry expert has suggested that the government's Home Information Packs (Hips) have put people off using buy-to-let mortgages to invest in rented property.

Hips came into force for four-bed properties on August 1st and for three-bed dwellings on September 10th.

It was hoped that Hips would speed up the process of home buying after mortgages were arranged.

However, Mark Butterworth of the Residential Landlords Association called the scheme "ill thought out" and expensive. He added that evidence suggested that many people with buy-to-let mortgages had been put off investing.

He explained: "Agents reported a surge in properties being listed prior to introduction - although it has been quieter since - and total disinterest from purchasers.

"There are concerns about the extension to two-bed and rented properties, and a general sentiment that any more paperwork is likely to lead to disinvestment in the rented sector."

A recent report by the Royal Institution of Chartered Surveyors suggested that buy-to-let mortgages have become more expensive as a result of tightening lending conditions and rising interest rates.