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Buy-to-let brings in the crowds – Investor numbers up 8%
February 11, 2015Article by Charlotte Ashton
It’s been apparent for a while that UK buy-to-let properties are the darling of the investment community, but a new report from Ludlow Thompson has revealed that their popularity is increasing at an incredible pace, with the number of buy-to-let investors rising 8% in the past year alone.
A huge market
The buy-to-let investment market is simply huge, with the Ludlow Thompson report showing a net income for investors of £13.1 billion in 2012/13, up from £12.1 billion in 2011/12. The income was split across some 1.63 million investors based on the report’s data, starkly revealing the size of the sector.
Ray Withers, chief executive of specialist buy-to-let investment company Property Frontiers, comments,
“We’ve seen the UK’s buy-to-let market attract increasing numbers of investors over the past few years and the Ludlow Thompson figures demonstrate the size of that growth. We’ve also seen a maturation of the kind of properties they are buying as the sector has grown. New builds and redevelopments of landmark buildings are the key to attracting young professionals and it is these that investors are snapping up.
“So in Manchester, for example, the waterfront apartments at Custom Quay, with their communal roof terrace that enjoys panoramic views of the Quays, are creating quite a stir. In Liverpool, it is the Parker Street redevelopment, home of the ballroom which hosted Beatle John Lennon’s wedding reception that is turning investors’ heads.”
The winning ticket
With other forms of investment returning lower yields than the 5-6% which can comfortably be achieved with buy-to-let properties, the market looks set to expand further still. Capital growth adds to the charms, with residential property achieving growth of more than 7% in 2014.
For investment properties in this more mature marketplace, luxury and location are the two watchwords. These have driven an improvement in property standards which, coupled with the increasing demand from tenants, saw rents rise by 3% in 2014, according to the Your Move and Reeds Rains letting index – six times the rate of CPI inflation.
While the appetite of overseas investors for UK buy-to-let property remains strong, the approach of Pensions Freedom Day is tipped to see domestic demand soar as well, as Ray Withers explains,
“One cannot consider the buy-to-let market in the UK at the moment without a thrill of anticipation at the likely impact of Pensions Freedom Day. One in every three retirees is apparently looking at buy-to-let property investment as a means of funding their golden years. We’re seeing ever more local markets emerge as a result. Right now, Worcester is the place to be for those in the know, with the right properties there offering 7% gross yield assured in year one.”
Nor is it just pensioners in the UK who are planning to get in on the action. Lending to landlords was up by 9% in November 2014 compared with a year earlier, according to the Council of Mortgage Lenders. At the same time, borrowing by mainstream homeowners fell by 7% in the year to November.
With so much momentum behind it already and so many new investors on the scene, the buy-to-let story in the UK is maturing at quite a pace and this fascinating tale is far fro over yet!
For further details of buy-to-let investment opportunities in leading UK locations, contact Property Frontiers today or call +44 1865 202 700.