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Developments In The UK Buy To Let Market

by Jim ONeil on July 14, 2011

in Mortgages

First time homebuyers are facing a restricted mortgage financing market. This has provided the buy-to-let sector with a boost. Last week, the Communities and Local Government

Department announced that the number of renters of privately-owned properties increased 55 percent in the past six years. Many prospective homebuyers are realizing that they cannot afford the deposit required to purchase a home.

The best home loans require a deposit of at least 25 percent. While more people are choosing to rent, there are just as many potential landlords interested in profiting from increasing rental income.

While buy-to-let was very unpopular during the last three years, it is back with a vengeance. Not only are there more loans available, prospective buyers are increasingly confident.

During the credit crisis, many lenders left the market and others drastically tightened lending criteria. Yorkshire and Clydesdale Bank Retail Director Steve Reid commented on the recent positive rebound. According to him, rental property demand is currently outpacing supply and there has been an increase in yields from buy-to-let arrangements.

The Council of Mortgage Lenders reported that new buy-to-let lending increased from £2.1 billion to £2.9 billion from first quarter 2010 to the same period in 2011. London & Country mortgage broker David Hollingworth stated that new lenders have entered the market and some others are returning.

He also reported that cheap loans for buy-to-let programs are becoming more common.  Experts predict that as additional funding becomes available, there will be an increase in buy-to-let lending.

Buy-to-let owners make money from rental income and increasing capital value. Over the past ten years, this market has grown rapidly, especially considering the recent financial crisis. At the end of 2010, the sector was valued at £151 billion.

Prospective investors should research whether buy-to-let is right for them and if so, find a great property and secure financing.

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