The Bank of England’s Monetary Policy Committee today voted to maintain the official bank rate at 0.5%.

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Leek United Building Society has launched a new fixed rate buy-to-let mortgage for direct customers only set at 4.58% to 30 September 2012, with a maximum loan-to-value of 60%, and a fee of £995. This new product as the building society comes back to the market after a short absence.

Bank lending to home buyers and property investors plummeted to the lowest level in a decade over the past year.

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Experienced landlords looking for buy to let mortgages to expand their portfolio can check out a new property investment loan from Kensington.

A new mortgage line for landlords who already have two buy to let properties offers up to 75% loan-to-value with two and three year fixed rates from 5.69%. to 6.19%

The deal comes with a 2.5% arrangement fee.

Borrowers can hold up to 10 investment properties worth up to £2 million in a Kensington portfolio.

“The private rental sector is an increasingly important form of housing and buy to let investors have played a significant role in improving quality and affordability for tenants. Tenant demand is growing and as the property market recovers, many landlords are looking to meet this demand and expand their portfolios,” said Charles Morley, head of sales and product development at Kensington

Buy to let landlords are getting out their calculators to see how lenders withdrawing interest only mortgages might affect portfolio profitability.

Most landlords have interest only deals with their lenders because they are cheaper than repayment mortgages and the property business objective is to sell a property at a profit to repay any loan while keeping costs low to free cash flow.

It’s unlikely lenders will change existing loans, but the fear is that future property investment mortgages may be repayment only after Lloyds TSB withdrew interest only deals for loans after £500,000.

This is a wake up call for investors because Lloyds TSB is the UK’s largest mortgage lender and owns several popular buy to let brands like BM Solutions and Birmingham Midshires.

Other lenders are also looking at the move because interest only loans leave borrowers with few options other than selling at the end of the mortgage term in the absence of any other repayment strategy.

At this stage, withdrawal of interest only products is a worry not a certainty for buy to let mortgage borrowers.

In the long term, the possibility highlights an underlying concern for property prices

Many property investment strategies were based on prices rising in a market fuelled by inflation and taking out profits to reinvest.

This means many investors are vulnerable to mortgage payments going up because they have a high level of borrowing against their properties. Making repayments more expensive makes rentals less profitable and puts more pressure on finding cash to pay the bills, especially in void periods.

The Bank of England has announced this week that inflation is likely to remain around the 2% mark for the foreseeable future which allows the bank rate to stay low.

That means the bank sees house price inflation remaining low with a likelihood of modest increases in property values.

Lenders see a similar scenario and want to protect themselves from borrowers who may not be able to repay the cash they owe when their loans are up.

These lenders want cash not to repossess property, because if prices do not move, they are likely to have to write off billions selling homes at a loss.

Switching borrowers to repayment mortgages is a sensible and prudent option for everyone – the problem is whether landlords and investors afford to pay.

Buy to let landlords with a Nationwide  residential mortgage face a 1.5% interest rate increase.

The details are in a confidential internal document, according to Money Mail.

The rate rise takes effect from September 1 for new requests to switch a mortgage from a residential product to one that covers letting a home to tenants for more than six months.

Borrowers who already have buy to let permission will have their rates put up on December 1.

Nationwide also intend to introduce new fees across the board for mortgage borrowers, according to Money Mail, including a £75 for converting to a letting mortgage rate, £20 for changing the term of a loan and £50 for switching between an interest only or repayment loan.

Money Mail says the document states: ‘Charging of fees will generate significant income for the group.’

The rise will mainly affect reluctant landlords – homeowners who have had to move for work or personal reasons but  who are unable to sell their home and rent the property in the short term.

Property owners need to check out the small print in their insurance policies to make sure they are actually covered for all eventualities.

Somewhere in the schedule, the insurer will spell out that the policyholder must disclose any information that might affect the terms of the policy.

For plain speakers, this means the insurance company has the right not to pay out if the property investor has failed to tell the company about any changes that have occurred since the policy was taken out.

One of the most popular reasons for invalidating a policy was bringing in unqualified builders or carrying out DIY work.

This means check out any builder or tradesman has accidental damage and liability cover before they commence work.

The only way to be sure a builder has adequate cover is to get a copy of their policy and send the details to your insurer to confirm everything’s OK before work starts.

Starting work before clarifying insurance cover can invalidate building and contents insurance and any claim might be refused, for instance:

• Some policyholders failed to tell their insurers about work on their properties and have had claims refused for water damage caused while builders were replacing roof tiles and rain poured in during a storm.
• On the other hand, DIYers have damaged their homes by knocking out retaining walls or dropping hammers in the bath and had claims refused because their policies stipulate that competent, professional builders must complete certain work, like structural alterations.
• Some building work, like changing doors and windows may lead to an extra premium if your insurer feels the risk of a break-in is increased by the work, especially if this means a property is left open during building works.

Honesty is the best policy when dealing with an insurance firm, even if it means employing a more expensive builder or tradesman.

Insurance companies often refuse to pay out on claims where anyone who owns or lives in a buy to let property has not declared an unspent criminal conviction.

Landlords can unknowingly have their insurance claims rejected if a tenant has not told them about unspent convictions and property investors and councils are facing problems providing homes for ex-offenders.

In a recent case, insurers Aviva paid out £241,000 to a woman whose estranged husband burned down the former matrimonial home.

The money was spent on rebuilding the home, and two weeks before she was due to take the keys back, insurance investigators discovered she was fined £150 two year’s before for receiving an overpayment of housing benefit.

Aviva voided the policy and are now claiming the £241,000 back on the grounds they would not have granted the policy if they had originally known about the conviction.

The Rehabilitation of Offenders Act 1974 lays down the rules about when convictions become spent – which is effectively when an offender no longer has to tell anyone about the court case.

The process is similar to getting points on a driving licence – they are plain to see for a set period depending on the offence and are then removed when the period is over.

The more serious the crime, the longer the unspent period lasts. The minimum unspent period is six months.

The problem for landlords is dealing with their own convictions is one thing, but asking tenants and their families to disclose their convictions is another.

The convictions do not have to relate to a tenancy – shoplifting and drink driving are two offences that are committed most often and ones that should be disclosed to an insurer.

Any landlord offering accommodation to ex-offenders should also review insurance policies to make sure they actually do provide the cover that is being paid for.

The issue also affects insurance brokers, letting agents and other property businesses that sell landlord and tenant insurances on commission without fully explaining the consequences.

Property investors searching for buy to let mortgages are hugely out of synch with the number of mortgages available.

Online keyword search analysis shows that 330,000 searches were made on the web for ‘buy to let mortgage’ in January yet the latest figures show only 93,500 investment mortgages were agreed in the whole of 2009.

The figures come from comparing online technology company Greenlight’s newly released property related online searches with the latest Council of Mortgage Lender’s loan statistics.

Figures over a like-for-like period are not available.

Meanwhile, the CML is concerned a multi-billion pound hole in mortgage funding generally will also shrink the number of investment mortgages agreed this year.

Although house price statistics seem to show house prices are increasing, they vary widely across the regions with London and South East feeling the major benefit as the ripples have yet to reach farther.

The problem is the government has propped up mortgage lending since the recession and the aid schemes are set to end over the next few months.

Traditionally, lenders would raise mortgage funds from money markets by securitising their loan books, but this market is wedged tightly closed and  is not an option for raising more cash.

Lenders are hoping the new government will act to stabilise the money markets so cash is freed up to fund more mortgages.

CML economist Paul Samter said: ‘With the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year. However, the longer-term problems facing the market remain and will limit the speed of recovery in the housing market and wider economy.’

Gross mortgage lending was an estimated £11.5 billion in March, a 24% rise from £9.3 billion in February and a 3% rise from £11.2 billion in March 2009, according to data published today by the Council of Mortgage Lenders (CML).

The figures are in line with the typical seasonal pattern of a rise in lending volumes in March.

Gross lending for the first quarter of 2010 was an estimated £29.5 billion, a 24% decline from the fourth quarter of 2009 (£38.9 billion) and a 9% decline from £32.4 billion in the first three months of 2009. This is the lowest quarterly lending total since the first three months of 2000, but is very much in line with our forecast of a gross lending total of £150 billion this year.

CML economist Paul Samter commented: “Overall, housing and mortgage activity remains subdued, but is comfortably higher than in the depths of the recession a year ago. Despite the increase in activity late last year and a subsequent fall early this year – due to the end of the stamp duty holiday – the underlying position looks to have barely changed. But with the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year.

“However, the longer-term problems facing the market remain and will limit the speed of recovery in the housing market and wider economy. Financial institutions still face the prospect of around £300 billion of official support schemes beginning to end from next year, and will need to find alternative funding sources. This will likely limit how much new funding can be made available to the housing market.”

CML members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK.