Buy-to-let 'should be a long-term investment'
Posted by Gary Winter
Those thinking about purchasing buy-to-let properties this year have been urged to think of it as a long-term investment rather than a way of making a fast buck.
Rising tenant demand has seen rent rates increase rapidly across much of the UK in recent months, meaning a UK property investment can offer excellent returns.
Nevertheless, landlords expanding their portfolios or those purchasing buy-to-let properties for the first time should still consider the long-term prospects of their investment.
That is according to David Hollingworth, buy-to-let specialist at London & Country Mortgages, who offered his advice as part of a number of top mortgage tips for 2012 being provided by Unbiased.co.uk.
"With rental demand pushing up rents there's been a renewed demand in the buy-to-let market and improved competition has seen better rates and choices available," he said.
"Prospective landlords should think about a property that will attract strong demand from tenants for years to come, as buy-to-let should still be considered a longer term investment option."
A number of lenders have returned to the buy-to-let mortgage market in recent months or even entered it for the first time as the sector undergoes something of a boom.
A report released earlier this week by Moneyfacts.co.uk revealed that there are now 486 different buy-to-let mortgage products available, exactly double the number on the market just two years ago and a hundred more than at the same time last year.
However, lending is still relatively restricted compared to that seen prior to the 2008 crash, so it is important landlords take steps to give themselves the best chance of being accepted for a mortgage.
For example, David Penney of Invest Southwest recommends building up a good credit rating before applying for a mortgage.
"If you have never had an overdraft, credit card or personal loan, consider taking out a couple of credit cards. Use them for spending and make sure you clear them every month. It will cost you nothing and you will begin to build up a credit rating, which the lenders will rely on to assess whether you are a safe bet," he said.
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