Assetz® News - Buy-to-let market expected to grow

Buy-to-let market expected to grow

27th February 2006 |

A report from Linden Homes has found that conditions for property investment are currently extremely good, while the buy-to-let market in particular is set for considerable growth in the coming months.

Pointing to a "vibrant" property market, Linden Homes has indicated that 35 per cent of all its units have already been sold to investors since the beginning of the year. Indicative of the high levels of confidence throughout the industry, the statistic has confirmed recent reports about a pickup in activity in the new year and a wholesale recovery in the market.

Property investment is again providing decent returns in terms of both capital appreciation and rental yields, with the buy-to-let sector now attracting a huge amount of interest from investors hoping to profit via both routes.

The social stigma of seeking rented accommodation no longer exists, at least to the same degree, and increasing numbers now choose to pay rent for many years before deciding to secure a foot on the property ladder. A growing student population has also helped buy-to-let investors, while workers entering the country from abroad also tend to opt for rented accommodation until a property purchase is feasible.

These factors have combined to make buy-to-let one of the most popular investment opportunities in the UK, with Linden Homes also citing the less upbeat issue of an increasing number of household break ups.

Nick Gardner, director of Chase de Vere Mortgage Management, instead highlights a culture of independence and freedom that is more immediately relevant to renting property. Either way, the statistics point to a genuine upturn in buy-to-let interest, typified by a finding from the Council of Mortgage Lenders that recent months have seen record numbers of buy-to-let mortgages.

Philip Davies, chief executive of Linden Homes, is also encouraged by house price increases which are similarly beneficial to buy-to-let investors and those seeking capital appreciation.

Buy-to-let investors increasingly make their money through a combination of the two, while investors buying and selling property purely on the basis of house price inflation now seem to be demonstrating greater foresight and patience.

"I am encouraged by the number of professional investors making reservations this January and February, who have chosen not to expand their portfolios until now," said Mr Davies.

"They are investing for the long-term and are expecting steady house price inflation of three to five per cent rather than a return to the growth levels of previous years."

With rental yields once again very good across the country and house prices rising each month, experts agree that 2006 will be a big year for the UK property market, with high levels of interest in all sectors.