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Buy-to-let boom expected


03-02-2014

By The Sentinel  

 
AMATEUR landlords who plan to buy their first investment property to put on the rental market could be targeted by mortgage lenders seeking new business.

Trade experts say that the buy-to-let market is set for a boom over the coming months as banks and building societies turn their attention towards first time landlords looking for their initial investment property, or those who want to expand a small portfolio.

The shift in focus could be accelerated by the impact of new regulations coming from the Mortgage Market Review, which could make it much harder for buyers to get a loan for a residential mortgage. But buy-to-let loans will not be covered by the new rules and lenders could turn to these to take up any slack elsewhere under the new regime.

Recent research by property group LSL found that a typical buy-to-let property is returning a yield of 5.3 per cent. At the same time more middle-aged tenants, in their 30s and 40s, are turning to renting a home rather than buying which is keeping demand buoyant.

Rents across the country are increasing, with the North East and West Midlands experiencing the biggest increases in rent during December, rising 1.5 and 1.4 per cent respectively.

Including void periods between tenancies and the increase in the value of a property, the average landlord saw a return of 8.8 per cent in 2013.

This is worth 14,372 and made up of a rental income of 8,189 and capital gain of 6,183.

However, with a possible rise in the Bank of England base rate on the horizon, some in the sector have claimed this is the right time to take out a fixed rate product and for those already holding buy-to-let mortgages to remortgage to give them peace of mind and security whatever happens to interest rates.

www.stokesentinel.co.uk

 

 

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