Buy-to-let booms despite faltering property market
Investing in houses and flats to rent is on its way back according to the Council of Mortgage Lenders.
The number of buy-to-let properties soared by 84,000 last year, the Council of Mortgage Lenders (CML) revealed on Thursday. Buy-to-let mortgages now account for nearly 13 per cent of the total outstanding value of home loans in the UK.
Does that mean investing in property to rent is beginning to make sense again, despite the moribund property market? Jonathan Samuels of Dragonfly Property Finance believes so.
"Buy-to-let is nowhere near the giddy heights of 2007, but these latest figures confirm that it's on its way back," he said.
"Landlords are making hay while the sun shines, adding to their portfolios in order to increase their exposure. The fact that property prices are low is contributing to this trend. It means landlords can buy low and rent high, manna from heaven!"
His opinion was backed up by a sharp climb in the number of renters in the UK. Last year, more than 275,000 new tenants registered for private rental accommodation, according to estate agents Countrywide. That was a 24 per cent increase on the previous year.
Nick Dunning, commercial director at Countrywide, said: "With a record number of tenants entering the private rental sector, there is a vast shortage of properties available in all areas of UK, which could potentially fuel a steady rise in rent prices throughout 2012."
Since the property market slump, prospects haven't been great for landlords, but increasing returns from higher rents can offset the worry of falling house prices.
"Rents are currently between 10 per cent and 20 per cent higher than in 2006 with yields of 8 per cent readily available," said Stuart Law of buy-to-let specialists Assetz. "A shortage of property in the capital and other major cities such as Manchester, Liverpool and Leeds will continue to drive up rents, with supply unlikely to ever meet demand. This will continue to underpin the buy-to-let market in the coming years."
There are several mortgage deals available for buy-to-let, said Mark Harris of broker SPF Private Clients: "While much of the property market is in the doldrums, buy-to-let is thriving. The clearest evidence of this comes with the number of mortgages now available to landlords: with 100 more buy-to-let products on offer than this time last year."
Competition has led to a fall in the average rate on a buy-to-let mortgage.
"There is also more choice at higher loan-to-values with a number of deals available to those with just a 20 per cent deposit," said Mr Harris. "This makes the market even more accessible for investors and is set to fuel growth further still."
However, the CML's figures also revealed a more alarming statistic for potential landlords: the repossession rate among buy-to-let properties is higher. While the number of repossessions last year fell to 36,200 – their lowest level since 2007 – buy-to-let properties accounted for 5,900 of them, up from 4,700 in 2010.
"This should be no surprise," said CML director general Paul Smee. "Lenders make strenuous efforts to try and help people keep their homes wherever possible. This is less an imperative in the buy-to-let sector."
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
newsAs the world remembers Mandela the hero, the prison where he spent 27 years seems all the more brutal
arts + entsUnder Tamara Rojo's inspired direction, it seems possible that it could challenge the dominance of the Royal Ballet. We meet some established names and rising stars
travelDiscover Uruguay's jet-set beach resort, an Atlantic enclave with plenty of art and culture to explore on the side
Mountain goats miraculously survive avalanche in the Alps
- 1 Mountain goats' miraculous escape from avalanche captured in dramatic video footage
- 2 Gurdwaras-turned-food banks: Sikh temples are catering for rise in Britain’s hungry
- 3 Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
- 4 Government delays EU immigration report because it is too positive
- 5 'I'm experiencing austerity as well', says Princess Michael of Kent
- < Previous
- Next >
iJobs Money & Business
£45000 - £70000 per annum + Bonus + Benefits: Harrington Starr: Technical Impl...
£65000 - £90000 per annum + Bonus + Benefits: Harrington Starr: Rogue Trading ...
£35000 - £45000 per annum + BONUS + BENEFITS: Harrington Starr: A leading, Cit...
£40000 - £50000 per annum + benefits + bonus: Harrington Starr: Data Analyst -...
Day In a Page
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000