Assetz® News - Buy-to-let market "hotting up"

Buy-to-let market "hotting up"

28th February 2006 |

The latest survey from the Royal Institution of Chartered Surveyors (Rics) has found that the buy-to-let sector in the UK is buzzing with activity as investors look to take advantage of very favourable conditions.

With chartered surveyors now reporting the biggest increase in tenant demand in four and a half years, optimism in the sector is high and a number of first-time investors are now opting for the buy-to-let option before looking to buy and sell for capital gains.

After the government's U-turn on self-invested personal pensions (Sipps) in the December pre-Budget speech, the vibrancy in the buy-to-let market has taken many experts by surprise, but it seems that investors are just as happy to pump their money into property even without the benefits of tax breaks.

The survey discovered that 27 per cent more of Rics' members reported a rise in new lets than a fall in the three months to January, which is up from 23 per cent in the three preceding months.

Furthermore, rents for both flats and houses are now rising above the survey's long-run average, although the general consensus is that larger properties will see a slight slowdown in this respect towards the end of the year.

Nonetheless, small properties in particular are doing remarkably well, with demand from students and young couples growing steadily.

Jeremy Leaf, a spokesman for Rics, has admitted that the sector is "hotting up" and he anticipates that the buy-to-let sector will play a key role in sustaining the UK property market during the course of the year.

"Buy-to-let investors are active once again, which will help dispel fears that an absence in first-time buyers will contribute a significant slowdown in the wider housing market next year," he said.

House prices are currently soaring in the UK after rises in three consecutive months and while this is boosting those looking for capital appreciation on their investments, it is also ensuring that there is a steady flow of young individuals and couples looking for rented accommodation.

While this continues, property investment remains an attractive option for UK residents looking for impressive returns.

Meanwhile, the British Bankers Association (BBA) has found that there were more than 140,000 mortgage approvals for all purposes in January totalling £12.7 billion. In a traditionally slow month, this is only one per cent lower than December and is eight per cent higher than the corresponding figures for January 2005.

Moreover, approvals for house purchase loans were up by 32 per cent in number when compared to January 2005 and 47 per cent in terms of value.

The statistics clearly reflect the confidence that is currently saturating the housing market in the UK, as investors go into transactions without the trepidation that was common just 12 months ago.

The buy-to-let sector seems to be reaping the rewards of this general buoyancy in the market and investors are looking for the trend to continue in the coming months.