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."

Suggested Topics
Lois Pryce... Life Without a Postcode. Lois lives on a boat with her husband.. Registering to vote in the election has prooved to be very difficult without a fixed residential post code. (David Sandison)
newsHow living on a houseboat meant I didn't officially 'exist'
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Steven Fletcher scores the second goal for Scotland
cricketBut they have to bounce back to beat Gibraltar in Euro 2016 qualifier
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
    How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

    How to make your own Easter egg

    Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
    Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

    Bill Granger's twist on Easter Sunday lunch

    Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
    Joe Marler: 'It's the way I think the game should be played'

    Joe Marler: 'It's the way I think the game should be played'

    The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
    Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

    Cricket World Cup 2015

    Has the success of the tournament spelt the end for Test matches?
    The Last Word: Justin Gatlin knows the price of everything, the value of nothing

    Michael Calvin's Last Word

    Justin Gatlin knows the price of everything, the value of nothing