Buy To Let Updated:
It's proving to be a positive start to the year for the buy-to-let (BTL) sector, arguably fuelled by surging tenant demand and rising property and rental prices, with there being a significant rise in the number of BTL mortgage applications being received by lenders.
According to figures from Connells Group Mortgage Services, January saw a 35% increase on the number of applications received compared to January 2013, an encouraging year-on-year rise. It's even more impressive when looking at figures for the whole of 2013 – over the year, the number of applications rose by 62%, indicating that landlords are taking advantage of the increased availability and competitiveness of BTL mortgage deals.
And there's certainly a lot to choose from. Surging demand is helping to boost the level of competition in the BTL mortgage sector, as Moneyfacts reported earlier this week, with more lenders entering the market and offering standout deals. Why not get in on the action and see what BTL mortgages are available?
Getting a suitable mortgage will be the first step on the road to starting (or expanding) your portfolio, and it could be a great time to do so. This positivity can be backed up by figures from the latest LSL Buy-to-Let Index, which show that average annual returns achieved by landlords rose to 8.9% by the end of 2013 – the equivalent of £14,767 per year – with landlords in the capital faring even better, more than doubling the national average with annual returns of £38,104 (14.6%).
Both figures are a significant jump from those reported a year previously – in January 2013, average returns across England and Wales were 5.7% while in London it was 11.4%. And, if rental property prices continue to increase at the same pace as has been seen, the average buy-to-let investor could expect to make total annual returns of 13% over the next year – equivalent to £22,256 per property.
"Rental yields remain historically high," said David Brown of LSL. "Meanwhile rising prices [are] considerably boosting total annual returns… As mortgage availability grows and rates seem set fair for the time being, many landlords will continue to expand their portfolios."
Why not get started?
If that doesn't sound like a good enough reason to get in the BTL sector, we don't know what does. Despite the Help to Buy scheme encouraging more people to get on the ladder, tenant demand is still high – there's a distinct lack of properties available, which means many are turning to the rental sector. The LSL Index also found that tenant finances have dramatically improved, with arrears representing just 7.4% of all rent, so why not get on board?
Check out the best BTL deals and see if you can benefit from such positive figures.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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