Government exposed to Manchester buy-to-let risks

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7:31 am, September 29, 2008
Government exposed to Manchester buy-to-let risks

The government will become a major lender to Manchester buy-to-let investors following the nationalisation of the Bradford & Bingley mortgage bank.

Around 85 per cent of B&B’s £41bn loan book is to buy-to-let and self-certified borrowers and it was a popular source of funds for amateur investors in Manchester city centre apartments.

A sign of strain in the housing market is that 2.87 per cent of West Yorkshire-based B&B’s lending was in arrears at the end of June – up from 1.62 per cent 12 months previously – and this figure is believed to have increased since.

The government is taking on the bank’s mortgage lending while the 200 branches and £22bn of retail deposits will pass to Banco Santander, the Spanish owner of Abbey and Alliance & Leicester.

The nationalised bank, the second following last year’s rescue of Newcastle-based Northern Rock, will almost certainly be forced to repossess homes if the housing market continues on its downward spiral.

Speaking on Radio Five Live’s Wake up to Money programme today, banking analyst Alex Potter of Collins Stewart, said: “We will soon see the first interview with someone who has been kicked out of their home by the government.”

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