Rent guarantee insurance: buy to let
While entering the buy-to-let market remains a tempting proposition for many rent guarantee insurance holders, it’s being advised this week that landlords must proceed with caution.
It’s believed buy to let insurance holders should take time to look at the performance of their individual market, according to one expert.
David Whittaker is managing director of Mortgages for Business.
He explains the average yield on a standard buy-to-let is currently at 6.3 per cent – suggesting a “mismatch” between yields and rental value as a result of falling house prices and the rising cost of rent.
Mr Whittaker says: “With property prices being soft, a figure over six per cent on buy-to-let is not sustainable in the longer term.”
Defaqto revealed this week that there has been a 104 per cent increase in the number of available buy-to-let mortgage products in the last three years.
He goes on to say that while it is “attractive for landlords to lump in, it will be determined by that landlord’s view of the market and the region”.
In related news, buy to let mortgage products have increased by 104 per cent since 2008, with brokers becoming increasingly important within the sector
Analysis by independent financial research company Defaqto has found the number of buy to let mortgage products on the market has grown by 104 per cent over the last three years.
It also finds that intermediary-based products have become even more prevalent in this sector.
Data extracted from Defaqto Matrix shows that the number of buy to let mortgages available has increased from 237 in October 2008 to 483 currently.
In addition, Defaqto data also indicates that over the last three years there has been a marked growth in the proportion of buy to let mortgages that are available through intermediaries:
In 2008, 70 per cent of buy to let mortgages were broker only products or available through both intermediaries and providers directly – this has now increased to 86 per cent
Over the same period, the number of products only available through brokers has grown from 24 per cent to 60 per cent
David Black, Defaqto’s Insight Analyst for Banking, said:
“The last few years have seen significant growth in the number of buy to let mortgage products on the market. This shows that, although the buy to let sector has contracted in terms of lending levels in recent years, the market is certainly becoming more buoyant with buy to let regarded by many as a potential growth area.”