Find out what’s happening in the property investment arena both in the UK and internationally
Rising rents spur on buy-to-let investors as private rented sector goes from strength to strength
October 21, 2014Article by Charlotte Ashton
It seems that every way you turn at the moment you see positive news about the UK buy-to-let sector. As house price rises push more and more individuals into renting (Office for National Statistics figures show UK prices as increasing by 11.7% in the year to August 2014), a growing class of ‘lifestyle tenants’ is swelling the ranks of the private rented sector even further.
In addition to those renting as a result of being priced out of the market, a growing number of tenants are actively to choosing to rent rather than buy. Renting provides an element of freedom and choice that is denied to owner occupiers and which is being seen as increasingly attractive for a new generation of professionals in the UK’s cities. Ray Withers, Chief Executive of specialist property investment company Property Frontiers, explains,
“We’re seeing a boom in young professionals looking to rent top quality apartments in city centre locations. They are demanding high spec homes with all the mod cons. Of course, this is creating a fantastic environment for buy-to-let investors, who are surging into the marketplace to meet the demand.”
Property Frontiers have found that their buy-to-let apartments are incredibly popular as a result of this demand. Their high end apartments in Liverpool city centre, which offer investment from £64,950 and 6% net yield assured for five years have been commanding particular attention, while the increasing excitement about Northern Ireland’s buy-to-let market has also seen their central Belfast apartments snapped up, with prices from £108,100 and up to 8% expected yield.
Record rents and maximum flexibility
Other circumstances are also favouring buy-to-let investors and would-be investors. The number of buy-to-let mortgage products available is at an all-time high, according to Mortgage for Business, which reported a total of 707 separate loan products available as at the end of Q3.
Concurrently, rents are on the rise, reaching a record-breaking average of £768 per month in England and Wales during September 2014, based on LSL data. While rents are higher in the south, lower property prices in the north of England mean that investors can expect greater returns from the uppermost half of the country, according to TotallyMoney.com.
RICS has also issued its share of positive opinion regarding the UK’s buy-to-let sector, reporting solid growth in tenant demand in its most recent residential market survey.
“It’s like the perfect storm for investor landlords,“ continues Withers. “High rents mean strong yields, good value financing options abound and tenant demand is extremely high. The prospect for capital gains with the current movement in the housing market is the icing on the cake. The sector really is experiencing an unprecedented boom. It’s an exciting time to be part of it.”