Cheaper buy to let mortgages and rising rents are set to encourage more property sales to landlords in 2013. That’s the view of a leading property website whose research has found that three quarters of professional landlords are set to add to their buy to let investment property portfolio in 2013.
In addition, the number of ‘virgin landlords’ looking to buy homes is running at its highest level for a year. We look at why it’s a great time to be considering buy to let property.
Research from Rightmove has found that three out of four professional landlords will buy more homes in 2013, while the number of ‘virgin landlords’ looking to buy for the first time is running at the highest level for a year.
The Guardian reports that ‘rising rents and low-cost mortgages will spur small landlords to buy more properties in 2013’. The newspaper reports that the average rental yield in the UK is now 5.7 per cent while buy to let mortgages are available at under 4 per cent.
Rightmove director Miles Shipside said: “While the cavalry charge from major institutions seeking to invest in the private rented sector has so far failed to materialise, private landlords, whether accidental, virgin or professional, are seizing the opportunities that come with having the battlefield to themselves.”
Buy to let lending fell sharply during the recession but has increased significantly in the last year. Part of the reason is the government’s Funding for Lending scheme which has given banks and building societies access to cheap funds in return for an increase in lending to mortgage borrowers and small businesses.
The Guardian reports that ‘interest rates on buy to let loans have tumbled – Skipton, Coventry and Birmingham Midshires all cut rates for landlords last month – and lending volumes are rising.’ Between October and December 2012, there was a total of £4.2 billion buy to let mortgages, up 8 per cent on the previous quarter.
“A strong demand for rental homes has pushed up rents, making property an increasingly tempting investment,” said Islay Robinson, CEO of London mortgage broker Enness Private Clients.
“First time buyers are finding it hard to get onto the property ladder and so are turning to the rental sector. Rents are rising and with many experts suggesting that house prices have reached the bottom, there is also potential for capital growth in the medium to long term.”
If you are considering buying an investment property, it’s important to act with integrity or to choose your letting agent carefully. The Local Government Association has recently stated that urgent action is needed to tackle rogue landlords and spiralling letting agent fees. The LGA It found that tenants are being asked to pay as much as £500 in non-refundable administration fees to letting agents in addition to their deposit and their rent.
Tony Newman of the LGA said: “For many people looking to rent, the up-front costs of a deposit and agency fees can be huge. We’ve heard stories of some letting agents charging hundreds of pounds just to carry out basic credit and reference checks.”