Britain in the grip of a buy to let boom
Investors are able to secure cheap buy to let mortgages at present, whilst first time buyers looking to get their foot on the property ladder and buy a family home are struggling. Mortgages are currently out of reach for many people who either are low earners, have poor credit history or don't have a large enough deposit.
Rents are currently at an all time high, and they are still on the rise in much of the UK. Homelet, the tenant referencing agency, has reported that in London rents have increased by as much as 8% in the last twelve months, and it's now more expensive than ever to rent a home.
The current stats for renting and rental yield by area are as follows:
Scotland
Monthly Rent: £545
Rent in 2010: £536
Yield: 5.6%
North
Monthly rent: £477
Rent in 2010: £457
Yield: 7%
Yorkshire
Monthly rent: £484
Rent in 2010: £467
Yield: 6.5%
North West
Monthly rent: £529
Rent in 2010: £509
Yield: 6.5%
East Midlands
Monthly rent: £505
Rent in 2010: £477
Yield: 6%
Wales
Monthly rent: £490
Rent in 2010: £474
Yield: 6.2%
W Midlands
Monthly rent: £543
Rent in 2010: £519
Yield: 5.8%
East Anglia
Monthly rent: £614
Rent in 2010: £567
Yield: 5.2%
South West
Monthly rent: £706
Rent in 2010: £684
Yield: 5.1%
South East
Monthly rent: £885
Rent in 2010: £811
Yield: 5.1%
London
Monthly rent: £1,287
Rent in 2010: £1,149
Yield: 4.8%
If you are a landlord, lenders are eager to do business with you. So what are the best deals?
Recently, Virgin Money cut their two year fixed rate buy to let mortgage from 3.99 per cent to 3.79 per cent for those with a 40% deposit, with a fee of approximately £2,000.
Manchester Building Society surprised investors by launching interest rates that can be fixed for up to 25 years, this entails a 25% deposit and fee of just £749. Borrowers can choose either a capital repayment mortgage or interest only with just a difference of 0.15% between the two. Early payment penalies apply for 7 years, but after that the term can run for 25 years.
The risk of investing in buy to let property is that property prices will fall and mortgage rates will increase, this with the usual worry of tenants defaulting on their rent and void periods. However, with good management and choices you can minimise these risks.
If people have at least 25% deposit, landlords are in a good position. Mortgage finance is easily available, with low rates and a general encouragement of this type of investment.
Circumstances today favour landlords. Provided they can find at least 25 per cent to put down as a deposit, landlords can easily find mortgage finance at competitive rates. And rates appear set to remain low, encouraging this form of investment.
For aspiring home owners, mortgages are hard to come by. This is helping landlords with the increasing availability of properties as well as the pool of tenants all looking for properties and driving rents up.
House prices are also in landlord's favour, with most areas remaining stable or flat. This pushes the rental yield up, and so giving many investors a desirable income stream.
Buy to let used to be very popular with first time investors, buying up properties with little deposit and hoping to make a quick gain. However, they were burnt by house prices and many of them taking advantage of 95% or 100% mortgages finding that they hadn't made the gains they had hoped, but had in fact lost out.
Investors today are very different and are much more focused on rental income rather than flipping a property for a quick gain. With the good returns these days, economists are predicting that we are moving towards the European model of renting as so many young people are unable to buy their own property.
Investors are able to secure cheap buy to let mortgages at present, whilst first time buyers looking to get their foot on the property ladder and buy a family home are struggling. Mortgages are currently out of reach for many people who either are low earners, have poor credit history or don't have a large enough deposit.
Rents are currently at an all time high, and they are still on the rise in much of the UK. Homelet, the tenant referencing agency, has reported that in London rents have increased by as much as 8% in the last twelve months, and it's now more expensive than ever to rent a home.
The current stats for renting and rental yield by area are as follows:
Scotland
Monthly Rent: £545
Rent in 2010: £536
Yield: 5.6%
North
Monthly rent: £477
Rent in 2010: £457
Yield: 7%
Yorkshire
Monthly rent: £484
Rent in 2010: £467
Yield: 6.5%
North West
Monthly rent: £529
Rent in 2010: £509
Yield: 6.5%
East Midlands
Monthly rent: £505
Rent in 2010: £477
Yield: 6%
Wales
Monthly rent: £490
Rent in 2010: £474
Yield: 6.2%
W Midlands
Monthly rent: £543
Rent in 2010: £519
Yield: 5.8%
East Anglia
Monthly rent: £614
Rent in 2010: £567
Yield: 5.2%
South West
Monthly rent: £706
Rent in 2010: £684
Yield: 5.1%
South East
Monthly rent: £885
Rent in 2010: £811
Yield: 5.1%
London
Monthly rent: £1,287
Rent in 2010: £1,149
Yield: 4.8%
If you are a landlord, lenders are eager to do business with you. So what are the best deals?
Recently, Virgin Money cut their two year fixed rate buy to let mortgage from 3.99 per cent to 3.79 per cent for those with a 40% deposit, with a fee of approximately £2,000.
Manchester Building Society surprised investors by launching interest rates that can be fixed for up to 25 years, this entails a 25% deposit and fee of just £749. Borrowers can choose either a capital repayment mortgage or interest only with just a difference of 0.15% between the two. Early payment penalies apply for 7 years, but after that the term can run for 25 years.
The risk of investing in buy to let property is that property prices will fall and mortgage rates will increase, this with the usual worry of tenants defaulting on their rent and void periods. However, with good management and choices you can minimise these risks.
If people have at least 25% deposit, landlords are in a good position. Mortgage finance is easily available, with low rates and a general encouragement of this type of investment.
Circumstances today favour landlords. Provided they can find at least 25 per cent to put down as a deposit, landlords can easily find mortgage finance at competitive rates. And rates appear set to remain low, encouraging this form of investment.
For aspiring home owners, mortgages are hard to come by. This is helping landlords with the increasing availability of properties as well as the pool of tenants all looking for properties and driving rents up.
House prices are also in landlord's favour, with most areas remaining stable or flat. This pushes the rental yield up, and so giving many investors a desirable income stream.
Buy to let used to be very popular with first time investors, buying up properties with little deposit and hoping to make a quick gain. However, they were burnt by house prices and many of them taking advantage of 95% or 100% mortgages finding that they hadn't made the gains they had hoped, but had in fact lost out.
Investors today are very different and are much more focused on rental income rather than flipping a property for a quick gain. With the good returns these days, economists are predicting that we are moving towards the European model of renting as so many young people are unable to buy their own property.
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