The growing buy-to-let market

The buy to let market in 2006 was worth £95bn with 850,000 outstanding mortgages. The buy to let sector is 11.3% of the mortgage market a rise of 2.3% since the end of 2005. Many landlords will have fixed rate mortgages and so the rising interest rates are unlikely to affect them.

There are many reasons for the rise in this market, nowadays it has become a more secure way of earning a pension and the number of television programmes that focus on buying and developing property. Parents are also buying property for their children to live in whilst in further education and then continuing to rent it out after the children move on.

The demand for rental properties has grown with the number of people now unable to get mortgages and with younger people wishing to live on their own in or near city centres where they are unable to afford property. Plus many more immigrants who do not want to or cannot buy property.

Lenders are offering a wider choice of mortgages to investors with greater flexibility now that the average void period in only twenty-five days. With competition between lenders increasing it is important they ensure their products are more user friendly.

Most investors are now treating buy to let as a long-term investment and whilst the rent covers the mortgage repayments they can see a rising appreciation.

It is unlikely that for the next three to five years the buy to let market will slow down.