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Buy to let booming

28th June 2006 | back to article listings BACK    print this article PRINT

The UK's buy to let sector is continuing to see huge growth, according to new figures released today.

Research carried out by specialist lettings agents Paragon Mortgages has revealed that the UK's landlords are pouring more money into property than ever before. Investment property prices rose by 2.9 per cent during May alone, the figures show, while rental yields have remained relatively stable.

It appears that rental income is not the prime motive for many people buying properties, as the research revealed that although rental yields have not increased significantly in recent months, the demand for property among buy to let landlords has increased substantially. This suggests that many investors are keen to put their money into property as an alternative to taking out a pension scheme.

Giving a largely positive outlook for the buy to let market, Paragon Mortgages managing director John Heron stated: "With rents stable, tenant demand healthy and market confidence solid, landlords continue to purchase new properties in a generally upward moving property market."

And while property prices continue to go up in the buy to let sector, a recent poll by the Association of Residential Letting Agents (ARLA) shows that most landlords are not ready to stop splashing the cash just yet. As reported yesterday, most ARLA-registered landlords are currently intent on adding to their property portfolios in the next 12 months, regardless of whether the property market suffers a blip in price growth.

According to Mr Heron, the prevailing conditions in the UK's economy mean that there is at present a strong future for the sector. He commented: "Landlords are experiencing solid demand for rental properties as economic conditions remain sound and interest rates are stable.

"There is a long term structural shortage of good quality residential property in the UK, and demand for it is growing steadily."

As a result, Mr Heron predicted that the UK market can expect to steady growth over the next five to ten years, provided the economy remains relatively stable.

On top of this, Mr Heron also pointed to the growing influence of migrant workers in the UK, who "tend to choose rented properties for their accommodation needs", thereby pushing up demand for rental properties.

With rental yields remaining relatively low when compared to the rate of property price inflation, more young people are also finding it more economically feasible to rent for longer rather than looking to buy. Indeed, a recent report from Abbey found that it is now cheaper in the long-term to rent property rather than buy in some parts of the UK.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/2789.html. Alternatively, please see our full press release archive.

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