Buy to Let Still Booming!

by Mark Johnston

                                        Buy to let still booming!

Buy to let has often been touted as a good alternative to traditional pension as property is solid whereas equities are volatile and are subject to uncertainty.

The latest available figures which are from 2010/11 showed that there are 3.6 million households privately renting their homes, compared with just 2 million a decade ago.

It seems in the current climate mortgage lenders are still cautious about lending to residential borrowers. However, they are stepping up their efforts in the investment side of residential property.

So although the mortgage market has faltered somewhat over the past few months the one area that is experiencing growth is the buy to let sector.

There is still a high tenant demand for rented properties and rents are at the highest they have been for a number of years.

A combination of high rents, falling house prices and low interest rates is once again tempting people in to the buy to let market.

 Buy to let has bounced back since the credit crunch, but data has shown that buy to let lending is still only around a third of its 2007 levels.

Figures from the Council of Mortgage Lenders (CML) earlier this year showed that landlord mortgage borrowing was up 32%, with almost half the cash going towards buying new properties.

The Royal Institution of Charted Surveyors (RICS) noted that demand for rental properties remains strong due to many would be first time buyers being unable to access the mortgage market and this fact looks set to continue for sometime.

David Whittaker, a director at buy to let specialist Mortgage for Business, said “buy to let is one of the few segments of the mortgage market that is really flourishing and investors are seeing strong returns”.

Lenders it seems are piling back into the buy to let market due to low interest rates, depressed property values and strong tenant demand. Miles Shipside, of Rightmove, the property website, stated that “there are nearly three times more buy to let mortgage products available than two years ago”.

The Co-operative bank has committed to lend £600 million to the buy to let sector and Paragon mortgages, the specialist buy to let lender, has also recently launched 50 new deals for professional landlords.

Mortgage rates on low loan to value (LTV) buy to lets start from around 2.94% for a very straightforward deal.

According to moneyfacts, the financial data provider, the number of buy to let mortgages on the market in August 2012 is around 501, up from 189 in July 2012 and the highest level since September 2008.

The Council of Mortgage Lenders (CML) figures show that there now are 1.42 million buy to let mortgages compared to just 89,000 a decade ago and also according to them between April and June this year a total of 33,200 buy to let loans were handed out.

Many financial experts expect products to become even more competitive over the next few months as more providers look to capitalise on the demand.

In conclusion it therefore seems that those looking to make an investment in property are once again considered a good option by lenders.



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