Rental demand 'good news for landlords'
Rental demand is the main advantage for landlords with buy-to-let properties, it has been claimed.
Chris Norris, policy manager at the National Landlords Association (NLA), said that it can be difficult to enter the buy-to-let market, but once an investment is made it pays off.
He explained that although buy-to-let mortgages are "slightly different" from regular house purchase loans, they are still tricky to access.
There are not as many options and loan-to-value ratios are much lower than they were in the past, meaning landlords need a substantial deposit to enter the market.
"At the moment, to make an investment in buy-to-let, you have got to have at very least a 25 per cent deposit for the property - if not higher - to access decent deals," Mr Norris said.
"So there are barriers there. It is not the case that landlords can access all this money that isn't available for first-time buyers, for instance."
But the NLA representative pointed out that if people have money to invest, they should consider buy-to-let or the private rental sector as these offer good value.
"With interest rates as low as they are, you're not going to see great returns on anything invested conventionally - in a bank for instance. And with the stock market not performing fantastically at the moment, you're not going to get a great return there, or you're unlikely to - unless you're particularly canny," he explained.
"So perhaps the four or five per cent yield that residential investment can return can be very good."
Earlier this month, a report from the NLA revealed that landlords would like more competition among lenders offering buy-to-let products.
Almost half (49 per cent) of landlords surveyed felt that more lenders would benefit the sector.
NLA chairman David Salusbury said at the time: "Such properties can be a worthwhile investment and can help ease the current housing crisis by providing a source of much-needed housing, but landlords should ensure that they plan for the future and are mindful of any potential increases in buy-to-let interest rates."
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