The buy-to-let market could be boosted this year by the sheer choice of mortgages lenders are bringing to the fore for those looking to put their money into a thriving residential lettings sector. In the past year, asking prices have once again soared, as demand six-times higher than supply has taken the average asking price per month to more than GBP 900. And with this average expected to top GBP 1,000 this year according to some commentators, there has been a slew of investors looking to either come to the market for the first time or increase their portfolio.
According to the latest Mortgages for Business Buy To Let Index, the final quarter of 2013 saw a large rise in the number of different products available to those who were looking to put their money into this form of investment. It said that the change had seen an increasing number of existing landlords shifting their equity towards new purchases.
"At the end of 2013 landlords could choose between more than 500 mortgage products and the figure today now tops 550. But that choice isn't just delivering cheaper deals as there are now even more imaginative and flexible financing options out there too, many of which offer some of the best yields," said David Whittaker, managing director of Mortgages for Businesses. "With demand for tenancies as strong as ever, landlords are making use of a more buoyant situation to boost their portfolios. As we move into 2014 capital accumulation is accelerating, and joining solid rental income to make buy to let consistently attractive to investors," he added.
In terms of what landlords are buying, the most standard or 'vanilla' purchases experienced the biggest growth in the volume of purchases. In the final quarter 47 per cent of these mortgages went towards buying new buy-to-let properties, compared to just 38 per cent in the period before and 31 per cent the year earlier. With more complex mortgages, the picture was similar. Some 29 per cent of houses in multiple occupancy (HMO) mortgages were for new purchases in the last three months, compared to 23 per cent in quarter three and 20 per cent in the final months of 2012.
Is this as positive as it sounds for the property market? Take a look at what happened the last time there was a sharp rise in lending products
- Friday 31 January 2014