Confidence within the buy-to-let market is growing among brokers and investors according to recent reports.
According to Remortgage.com ‘returns are increasing to as much as 8 per cent’, consequently this is attracting investors to buy property to let.
The number of buy-to-let applications has increased by over 60 per cent over the last year. According to Paragon’s Financial Advisor Confidence Tracking index, 46 per cent of respondents reported an increase in buy-to-let mortgage transactions.
Nigel Terrington of Paragon, told the Financial Times: “landlords in the private rented sector have enjoyed a buoyant start to 2011, with growing levels of tenant demand, rising rates and strengthening yields.”
The increased demand for rented properties saw rental prices being pushed up in March, further highlighting the investment potential within the buy-to-let market.
With first time buyers still facing difficulty acquiring mortgages, renting is becoming an increasingly popular alternative. The LSL Property Service recently reported that despite the higher loan-to-value products launching into the market many are still having problems obtaining the deposit for a property.
A survey conducted by Assetz revealed that first time buyers who cannot afford to get on the property ladder are renting at the fastest rate for two years. Not only does renting offer tenants a more financially feasible option over purchasing property outright, it provides convenience and flexibility.
According to Paragon the increase in demand has led directly to a reduction in the void period, that being the period of time a property remains vacant. Rental properties are being snapped up at the fastest rate since the beginning of 2009.
The buy-to-let mortgage provider has launched new specialist products aimed at professional landlords. The three new mortgage products have fixed rates for two years and are priced at 5.3 per cent, 5.4 per cent and 5.5 per cent, against LTVs of 65 per cent, 70 per cent and 75 per cent.
John Heron, Managing Director of Paragon Mortgages, says that demand among landlords is “clearly strong” so these products are likely to be seized by keen investors.
The Financial Times has reported that tenant demand for rental properties is set to continue rising into the ‘foreseeable future – as more and more first-time buyers are unable to get on to the property ladder – analysts say the outlook for buy-to-let property is good’.
With an increase in buy-to-let mortgage applications, the availability and range of specialist products suited to this area of the property market is also improving to accommodate the rising tenant demand. Although this does not solve the problem of first-time buyers getting onto the property ladder, rental is certainly an increasingly popular alternative in the UK.