Thirteen year forecast looks good for buy to let landlords

Two separate reports have been carried out that point to private landlords making steady returns over the next 13 years. The good news is down to rising rents and a house price recovery that will boost the sector.

Rents have already gone up by 4.5% over the last year and they are likely to be driven up further by the scarcity of mortgages being handed out by lenders, along with a shortage of good quality properties. The RICS (Royal Institution of Chartered Surveyors) predict that rents will rise by 4% on average throughout the United Kingdom over the next 12 months. The RICS survey also found that in the three months to July, the number of properties coming on to the market changed only marginally. However, demand among tenants is continuing to grow.

RICS Global Residential Director, Peter Bolton King, said “While tenant interest is still riding high, what remains to be seen is whether many are willing to meet the increasing rents being demanded by landlords. However, it is clear we have seen rents grow steadily right across the UK for some time. This is partly down to the problem of the scarcity of mortgage finance and the large deposits required by lenders. These barriers to home-ownership need to be addressed alongside the shortage of new stock coming to the market.”

The second report by the Council of Mortgage Lenders has said lending increased by nearly a fifth in the space of a year. They predict those investing in property and taking out buy-to-let property insurance will make capital as well as rental returns in the long term. House price growth is estimated to average at least 2% a year in real terms between 2012 and 2025. A huge lack of available properties will also push up prices later in the decade and when rents are added into the equation, a private landlord with a buy-to-let property can expect an average real return of 3% a year before tax.

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