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With borrowing rates plunging to new low, buy-to-let is here to stay

February 17, 2014Article by Ray Withers

Buy-to-let was big business before the recession, but the financial crisis caused many would-be landlords to pause and reconsider their options. Now, buy-to-let is back with a vengeance, as plummeting borrowing rates make this one of the most tempting investment opportunities on the market.

How to finance a buy-to-let property

Those looking to begin a buy-to-let portfolio or add to an existing portfolio have a range of financing options laid out before them. Those with deposits of 40% or more can take advantage of fixed borrowing rates that have dropped as low as 2.4%. Those with smaller deposits can still benefit from excellent mortgage rates currently.

Developer finance is another way in which buy-to-let landlords can fund their purchases and an option that many chose to take advantage of. Ray Withers, Chief Executive of Property Frontiers, explains,

“Many buy-to-let landlords who invest in their chosen property through Property Frontiers decide to utilise developer financing. It’s an extremely simple and cost effective way of funding a property purchase. Our buy-to-let apartments in Bradford city centre, for example, have 50% LTV developer finance available, fixed at 3.25% for four years, which is a fantastic rate.”

Booming demand

Demand for private rented accommodation has boomed in the past decade, with the number of renters doubling since 2000, to around 10 million people. This surge has served to ensure that buy-to-let landlords have a much larger market for their properties. At the same time, the government’s Office for Budget Responsibility has predicted that house prices will rise by 27% by 2018, making the capital gains side of buy-to-let particularly tempting.

The result is clearly shown by the recent Mortgages for Business research, which showed that 57% of buy-to-let landlords wanted to purchase additional property this year. This is on top of the already significant rise in buy-to-let borrowing seen in 2013, when data from the Council of Mortgage Lenders showed that 130,300 buy-to-let mortgages were granted during the year, compared to a 2010 rate of just 85,200.

Location focus – look north

Some of the most tempting buy-to-let opportunities on the market can be found by looking to the north of England. According to Primelocation, the average asking price in cities and towns in the northwest of the country has risen by 9.4% compared with a year ago. With the government projecting further rises, towns such as Bradford and Manchester are attracting particular attention.

Property Frontiers, as ever, is at the forefront of the market. In addition to city centre apartments in Bradford that are available from just £50,000 (25% below market value), the company is offering completed buy-to-let apartments in Manchester from £115,000, again with financing available. Given the market conditions, it is perhaps unsurprising that these opportunities are being snapped up so fast.

For further details of how to arrange a buy-to-let investment in one of these key areas, get in touch with Property Frontiers today.

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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