Buy To Let - Still on the Rise

The buy to let market is still on the rise even though the interest rate at 5.75% is the highest since August 2006.

Supply and demand controls the industry and the UK currently needs around 230,000 extra homes a year but only 170,000 are being built annually a shortfall of some 60,000. This leads to higher property prices and this in turn means more people unable to get on to the property ladder.

Average rents rose 6.5% in first quarter of 2007 from 9942 to 10591 proving that landlords can afford to raise their rents.

More people are choosing to live alone and their choice of location has changed, for example many more young people are choosing to live in city centres where they are unable to afford any property. There are also those who prefer to rent property so that moving around out of choice or career change is easier.

Landlords should be aware that because all rental income is taxable and if they own several properties this could put them into a higher tax bracket. Some landlords are settling for a small or no rental yield so they do not pay the higher tax rate.

Buy to let is now viewed as long-term and the days of getting quick profits have long gone.