Buy to let market set for busy 2011
The cost of renting a property has reached a record average per month, according to figures from LSL Property Services. LSL own estate agents Your Move and Reeds Rains and they say that rents have risen for the 10th consecutive month to an average of £692 per month.
The poor level of interest that the banks pay to savers has led to more demand for property and this is helping to drive the buy to let market.
Trinity Financial expect more lenders to offer buy to let mortgages next year as the banks look for more opportunities to lend to investors. Paragon recently resumed lending after a long break and Abbey have said that they are considering making a return next year.
The surge in rents is being driven by the lack of homes to rent and the lack of first time buyer mortgages. Unless first time buyers have a big deposit they are unlikely to be able to get on the property ladder and they will be forced in to renting.
Recent figures from the FSA show that just 2% of lending in quarter three of this year was to borrowers with a deposit of 10% or less.
Many investors see an opportunity to take advantage of the high rental yields and Capital Economics predict that 17% of household could be renting by 2015, against 14% today.
Not all parts of the country are reporting growth in rent according to the LSL report. The east of England and the east midlands reported falls of 3.1% and 2.4% in November, while rents dropped by 1.9% in the south east and by 0.6% in the north west.
The national gain was largely driven by rents rising by 1.8% in London, where they hit £992 per month - an increase of 9.2% in the last year.
Manchester is clearly seeing an increase in rental demand. Sally Ann Smith, from Philip James, a Manchester agent, was quoted in The Times saying that there was such demand for property that landlords are securing lets for February and beyond. She said: “Anyone buying a property now will secure tenants even before completion.â€
Buy to let mortgages available through Trinity Financial
To access the lowest mortgages investors will need a 40% deposit. Arrangement fees range from £0 to 3.5% of the loan amount.
Some of the lowest rates that Trinity Financial have access to are from Birmingham Midshires. They offer a two year fixed rate at 4.35% and it has a 1.5% arrangement fee. The Principality have a low two year fix at 4.69% and it has a cheaper arrangement fee at £999.
We also have access to an exclusive two year tracker rate at 3.99% and it has a £1499 arrangement fee. Investors will need a 40% deposit to access these mortgages.
If you have a 25% deposit there are some excellent rates available. For example, Birmingham Midshires have a two year fixed rate at 4.80% and it has a 2.5% arrangement fee.
December 20, 2010
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