The buy to let industry is surging back to health after the recession according to financial and property specialists thanks to favourable mortgage deals and rising demand.
Three years ago there were 3,650 mortgages for landlords. This fell to under 180 late last year. But mortgage lenders are reintroducing cheaper buy to let products.
Now there are 300, according to financial website Moneyfacts.co.uk, and some are offering 80 percent loan-to-value.
Melanie Bien, a director at mortgage broker Private Finance, said in an interview with The Telegraph: “With property prices rising, more lenders are likely to follow suit and edge up their maximum loan-to-values.
“It is just a question of when this will happen. While there is little choice of remortgage deals [for existing landlords] this isn’t such an issue when interest rates are low.”
Statistics from Findaproperty.com also suggests the buy to let market is stronger than ever.
Researchers at the website have found yields are on average 4.54 per cent across the UK and just over seven percent in parts of London. In 2008 they dipped to two per cent or less in many places.
Rents in most London boroughs and cities have risen over the past year. Havering and Haringey in London have risen more than 10 percent while Greater Manchester is up nine percent.
Demand for rental accommodation across much of the country is good and large city centres are particularly well supplied with flats to let.
Stuart Allen, of Broadley & Coulson agency, in Bishop Auckland, Durham, also reported in the Telegraph that there is currently a “buoyant market with large numbers of tenants who would otherwise be first-time buyers”.
Further south, a lack of property to let is causing rents to increase an average five percent in the last quarter in some areas.
A high level of professional renting in London seems to be ongoing, involving both British and overseas tenants, but overseas students provide the big growth market.
As a result of all these factors, landlords are being enticed back to the rental market, although they are being careful what and where they purchase.
Most are avoiding big city centres and many are going for older properties unless they can achieve large price reductions, often with rent guarantees, from developers keen to shift new-build apartments.
Jill Griffiths, of Andrew Granger in Leicestershire, says currently gross yields are four to five percent.
'”Tenant interest has been from single professionals, divorcees trading down and people moving into the area,” she said. “Our rental levels are favourable when compared to areas closer to London.”
