Buy-to-let investors aim at low cost but high yield properties
A report commissioned by The Mortgage Lender shows that investors look for cheaper and higher yielding properties, as the buy-to-let market offers very attractive returns in comparison to other asset classes. It also predicts that interest rates are set to rise 0.25% in the next few months and that the house prices will increase up to 3% this year.
The report covers the UK economy, the UK housing market, the private rented sector, buy to let mortgages, the impact of tax and regulatory changes alongside prospects and forecasts. It is available to download it here.
Peter Beaumont, The Mortgage Lender deputy chief executive stated: “Our special report on the buy to let market looks at the macro and micro-economic environment for buy to let investors and the factors that are likely to influence landlords’ investment choices over the coming years.”
“It also highlights the need for a flexible and competitive buy to let mortgage market to facilitate continuing investment in a sector of the housing market that has grown in significance as home ownership has declined and demand for good quality residential property has increased. “
The private rented sector has shown a considerable growth over the past decade. Almost one in five households in England now rent privately and nearly half of people aged 25-34 years old live in the private rented sector, which is practically double the percentage compared to 2 years ago. Moreover, the percentage of those aged 35-44 years old has risen from 11% to 29%.
All the above lead to the conclusion that buy-to-let mortgages play a vital role in supporting housing supply in the private rented sector, as the BTL mortgage market represents almost 13% of new UK mortgage lending. Although BTL mortgages increased almost by 200% between 2010 and 2016, there was a significant fall after April 2016, following the introduction of the stamp duty charge for additional properties.
In 2017 the BTL house purchase activity was reduced by nearly 27% compared to 2016 to 10.7 billion. This year, there has also been a further weakening of 11% compared to the same period last year.
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