The number of buy-to-let properties increased by a huge 84,000 during 2011, the CML (Council of Mortgage Lenders) has revealed. This now means that buy-to-let mortgages account for almost 13% of the total outstanding value of home loans in the United Kingdom.
Low interest rates are wiping out almost all income from savings but this does make mortgage repayments cheap and the buy-to-let property boom is being boosted by rents that are close to an all-time high throughout the UK. This could prove to be an easy money-spinner for both the amateur and the professional landlord. The average rent in the UK is now £711 each month, with tenants in the capital forced to pay an average of £1,000 meaning most landlords are enjoying a very profitable period. The current situation whereby landlords can get great deals on property and landlord insurance, and then rake in high rents is the perfect scenario for any property investor.
According to the Council of Mortgage Lenders when the buy-to-let market was in its youth in 2001, landlords on average obtained £185,000 worth of loans to invest in rental properties. Today that figure jumps to 1.4 million in loans, worth about £160 billion. The buy-to-let market is still a highly controversial subject as critics blame it for forcing up deposit requirements to levels which mean many first-time buyers cannot afford to get onto the property ladder. The number of buy-to-let loans has increased while the number of mortgages to first-time buyers has reached record lows.
Nick Dunning, Commercial Director at Countrywide Estate Agents, said: “With a record number of tenants entering the private rental sector, there is a vast shortage of properties available in all areas of the UK, which could potentially fuel a steady rise in rent prices throughout 2012. Rents are currently between 10% and 20% higher than in 2006 with yields of 8% readily available. A shortage of property in the capital and other major cities such as Manchester, Liverpool and Leeds will continue to drive up rents, with supply unlikely to ever meet demand. This will continue to underpin the buy-to-let market in the coming years.”
During the past ten years the number of young people getting on the property ladder has fallen from about 500,000 per year to 200,000. Last year about 275,000 people registered their interest in private rental accommodation with Countrywide Estate Agents which is up almost 24% on 2010.