Increasing monthly rents and positive house price forecasts are thought to be behind the huge resurgence of property investors showing interest in buying a property with the sole purpose of letting and protecting it with landlord insurance.
Both estate agents and mortgage lenders have reported a significant increase in business as investors are seriously taking note of Great Britain’s increasing army of tenants. Landlords will still have to find a substantial deposit and in the current patchy property market they will also have to ensure they buy a property in an area where tenants want to live, because in the past speculative landlords were quite often buying an unsuitable and overpriced property in pursuit of quick price gains.
Nigel Terrington, chief executive of specialist landlord lender Paragon, says “We are in the midst of a significant change in housing ownership, with the proportion of households in privately rented homes growing.
“This is not a short-term blip. Landlords are benefiting from unprecedented levels of tenant demand, resulting in improved pricing power and rental yields. The current environment is attracting experienced landlords who may have been inactive during the credit crunch back into the market. It is also appealing to new landlords.”
In the next few years housing shortages are expected to lead to increased rental demand and prices. With its diverse economy, high demand and acute housing shortage, London tops the list for landlords to buy properties. Given the capitals expected population growth it is very difficult to see how there can ever be enough homes to meet the demand. However, most serious landlords will say that owning a property to rent out is not one of easy riches. Anyone who bought properties at higher prices a few years ago will mean they are heavily mortgaged and one off costs such as refurbishments are eating into their returns.