Struggling buy-to-let landlords offered escape plan

Tuesday, 4 November 2008 2:15 PM

Buy-to-let landlords are being offered an escape plan from investments if they are struggling to cover their mortgage repayments.

Last week's Financial Stability Report from the Bank of England highlighted the threat to buy-to-let investors and suggested they were likely to face higher levels of repossessions.

Advisory firm Egerton Partners is launching a vehicle to bring investors not already in property and landlords together.

Under the deal, buy-to-landlords with large portfolios can swap future gains from their properties for a steady income from investors.

Investors would take gains and landlords would continue to manage properties and own them. Landlords would also maintain an interest in the properties by receiving a percentage of gains over a certain threshold.

"There are some excellent buy-to-let investors out there doing an excellent job.

"But this is not for 'mum and pop' buy-to-let investors with a couple of properties," said Chris Fleming-Brown, managing partner at Egerton.

"This is aimed at those with large property portfolios worth between £5 million and £30 million. It is the large scale factor that makes it work."

Investors should really come to the table with a minimum of £0.5 million, he added, with the product aimed at those who are willing to invest in property but have missed the opportunity so far and do not want to be involved in the day-to-day running of a property portfolio.

Different landlords' portfolios will not be pooled by the scheme - with a link-up between owners and investors.

Mr Fleming-Brown added the returns for investors would be "reasonably enticing" with deals lasting for around seven years.

"We have come across landlords who are struggling and investors with cash. This is an opportunity to put these two groups together."

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