Lendy warns buy-to-let investors against putting “all their eggs in one basket”
LENDY is urging buy-to-let property investors to diversify despite the value of residential mortgage write-offs hitting record lows.
The value of mortgages written off by banks and building societies in the last year hit a 12-year low at £72m, Bank of England data shows, but the peer-to-peer property platform is warning that rising interest rates could make it harder for borrowers to keep up with repayments in the future.
Liam Brooke, co-founder of Lendy, warned property investors must be careful about the level of exposure they take on in case of a downturn in the property market.
“Low interest rates have meant that bad debt in the residential market is close to all-time lows,” he said.
“However, investors can’t afford to take their eye off the ball now rates are starting to be pushed back up. Property will remain a sound investment, but portfolio risk must be managed effectively.
“Spreading risk across multiple properties and ensuring that loan-to-value ratios are sensible are vital safeguards. That’s where investing via P2P can help, enabling investors to diversify their property portfolios across a large number of investments with ease. Traditional property investing via buy-to-let forces investors to put all their eggs in one basket.”
Read more: Cash ISA savers left £4bn short by inflation