Since the introduction of the housing act 1988, buy-to-let has become huge business. According to the council of Mortgage lenders, lenders have advanced more than 1.7 million buy-to-let loans, approximately 15% of total mortgage lending.
In 2001, just 2.3 million households were in rented accommodation, compared with 5.4 million today. PWC estimate this number will increase to 7.2 million in 2025 and more than half of people under 40 will be living in properties owned by private landlords.
Average buy-to-let yields are currently 4.1% in London.
95% of landlords own fewer than five properties
3% of landlords who own more than five properties account for almost 22% of privately rented homes.
The Bank of England currently has no plans to raise interest rates, which have been pegged at 0.5% for the past seven years
If investors are willing to accept that they may find the value of their property slides in the short term, and can ensure their property meets the criteria of 75% loan-to-value and returning 125% of monthly mortgage payments then it can be a good long-term investment even taking into account the extra 3% stamp duty payable on property purchases. There is also a tax rise coming, as buy-to-let mortgage interest relief is axed and replaced with a 20 per cent tax credit
The key is to think long-term.
Please call your local David Andrew office today for further information about buying-to-let.