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Cash-rich landlords flourish thanks to low buy-to-let loan rates

Cash-rich landlords flourish thanks to low buy-to-let loan rates

The number of loans taken out by landlords increased by a third in the first three months of 2012, compared with the same period last year. Buy-to-let (BTL) loans now account for a record one in eight of all outstanding mortgages and, according to the Nationwide Building Society, 64% of mortgage brokers expect increased BTL activity this year.


Rates on buy-to-let loans have risen in recent months, however landlords can still get interest rates under 4 per cent.


Yields - the annual return produced by rents as a percentage of the house price - have risen to 5.2%, according to LSL Property Services. Investors should note that yield figures are calculated before other costs are taken into account.


Rents are good too. Across the UK the average rent is £709 a month, an increase of 2.4% on last year, says LSL Property Services. There are of course regional variances, but the trend upwards is encouraging.


Experts say there are good opportunities for savvy investors - but landlords must choose their property carefully and do their sums first.


Investors now put down an average deposit of 25 per cent and the rent covers 125 per cent of their interest-only mortgage payment, according to trade body the Council of Mortgage Lenders.


Martin & Co Pontefract can help would be landlords by discussing what properties are in demand in the area and also by attending viewings of potential BTL properties with them, to offer independent advice on the likely rental figure that property could achieve and whether any work might be necessary to maximise the return on their investment.


Falling house prices may offer opportunities to snap up a bargain, but anyone thinking of getting into buy-to-let should take a five to ten-year view, not look at what is going to happen in the short term.


Some landlords are now looking at buying three or four bedroom homes, which are popular with the growing number of families who are renting, rather than the traditional two bedroom flats or terraced houses.


For advice on the types of properties in demand in Pontefract and surrounding areas contact Martin & Co Pontefract on or telephone 01977 799550.


Further details regarding BTL mortgages can be found here.