Buy-To-Let Property Investment Increasing
Buy-To-Let Property Investment Increasing
Disgruntled savers who refuse to continue to suffer dreadful interest rates offered by banks are turning to buy-to-let property to provide very lucrative returns. Property investment in the UK is increasing and more and more people are becoming aware of the potential profitability of letting out decent standard rental property to tenants who want somewhere to live.
The residential property sales market is spluttering back to life after going into cardiac arrest in 2008, however, the tight lending criteria demanded by mortgage lenders offering high priced, low loan to value mortgages, requiring a hefty deposit has deterred many potential property buyers away from the market.
The Government have taken some action to encourage first and next time property buyers with the Funding For Lending Scheme, New Buy and NewBuild incentives, all designed to encourage growth and movement in the UK property market, and there are signs of a positive effect with prices creeping up.
Property prices rising may be great news for the UK economy but the increases are taking home ownership further away from people desperate to get on the property ladder. Something that savvy property investors are aware of and those able to raise mortgage finance are increasing their rental property portfolios to realise a healthy rental yield, due to strong tenant demand, providing an excellent return on their investment.
Buy-To-Let has the potential for generating profit, providing an income that can either supplement or replace a working wage. With the right portfolio of Buy-To-Let properties, investors can achieve financial freedom, give up their day jobs working for someone else and live off the rental income, and what’s more landlords can make use of rent guarantee insurance to protect their rental income should the tenant suffer an unexpected change in circumstances.
Tenant demand is incredibly strong in most towns and cities as renting has become a way of life for hundreds of thousands of young professionals. For many, it’s not a predicament they wish to be in. But it does mean that for those entering the buy-to-let market the chances of finding suitable tenants have seldom been better.
The rental return figures are very appealing, and there is huge demand for rental property from young professionals struggling to get on the housing ladder, many of whom will have to rent throughout their 20s, 30s and beyond.
Countrywide, the UK’s largest lettings agency, revealed data showing that the average rent in England, Scotland and Wales has risen for six consecutive months to £842 (GBP) per month in April, an increase of 0.8% year-on-year.
The national annual rental yield, (rent received in a year as a percentage of the price paid for the property), averages at 6.2%. However, mortgage payments, insurance, property maintenance and repairs need to be taken into account as do lettings agent fees if you want a hands off approach (national average is around 10% of the rent per month for full property management).
New or amateur property investors who are keen to take advantage of the current property market conditions must choose their buy-to-let property and tenants wisely.
Young professionals are generally seen as more reliable tenants than LHA or DSS tenants, students or families with young children, as they are more likely to cause accidental damage in rental properties. But it is vital for landlords or their appointed agents to carry out identity, credit and full tenant referencing checks before granting a tenancy.
Location is one of the key factors affecting Buy-To-Let as the more desirable rental properties are within 1 mile of a town centre or train station, as well as near local shops, schools, restaurants and fitness centres.
Two-bedroom, terraced houses are a popular favourite with experienced property investors and these in turn are popular with tenants with demand continuing to outstrip supply in many parts of the UK.