buyabetterhome.co.uk

The Buy-to-Let Mortgages Boom

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The number of properties available for rent continues to rise, according to the latest figures from the Council of Mortgage Lenders (CML), which show that the number of buy-to-let mortgages approved is up 17% in the last twelve months.  Despite the struggling economy and housing market, landlords are taking advantage of the all-time high in rent and buy-to-let is recovering from its low point in 2010.  Landlords snapped up an extra 17,360 properties with buy-to-let loans in the three months to June – up from 15,100 in the same period of last year.

Although stagnated house prices mean buyers will struggle to see any capital gain on their investment in the short term, rental income is seen as a stronger return than other investments.  Residential property has an average yield of 5.2%, which beats the 4.4% forecast dividend yield on FTSE 100 shares and the 3.24% average on cash savings.  However, this doesn’t take into account the extra costs of property investment, such as maintenance, insurance and letting fees.

Commenting on its figures, the CML director general, Paul Smee said: “Buy-to-let is continuing to show signs of recovery, and growing broadly in line with expectations.  The rental sector has grown strongly over the last decade or so, and buy-to-let continues to help deliver a wide choice for tenants.”

The average property rental price has risen for the fourth month in a row in England and Wales, to £725 – the highest level ever recorded.  The previous high of £720 was recorded in October last year, according to the lettings network LSL Property Services.  Rental rises have been put down to the glut of frustrated would-be home buyers, as the market enters its summer peak.  The table below shows how rents have been affected over the last 12 months, by region;

Regional Breakdown

 

Rents (July 2012)

Monthly Change

Annual Change

Yield (July 2012)

Yield (July 2011)

London

£1,057

1%

4.8%

5.0%

5.0%

East of England

£740

-0.4%

1.3%

4.8%

4.7%

South West

£629

-0.4%

-1.2%

3.8%

3.8%

Yorkshire & Humber

£541

1.1%

3.1%

6.6%

6.3%

North West

£586

1.2%

2.9%

7.1%

6.8%

Wales

£552

1.2%

0.8%

4.3%

4.2%

South East

£746

2.2%

4.0%

4.9%

4.8%

North East

£522

0.8%

0.6%

5.0%

5.0%

West Midlands

£571

1.8%

3.5%

5.9%

5.7%

East Midlands

£546

1.1%

-0.4%

6.0%

6.0%

England & Wales

£725

1.0%

2.9%

5.3%

5.1%

 

Sources: thisismoney.co.uk, cml.org.uk (image courtesy of peterjamesestates.co.uk)