Strong summer market to help drive buy-to-let recovery
A strong summer rental market combined with a better borrowing environment is helping attract more buy-to-let investors and driving the recovery of the buy-to-let market, says Richard Davies, head of Residential Lettings at Chesterton Humberts, one of the country’s leading lettings agents.
Davies reports increased interest from buy-to-let investors keen to take advantage of the strong rental demand, rapidly increasing rents and improved access to mortgage finance.
A recent report from the Council of Mortgage Lenders (CML) noted that the total number of buy-to-let loans rose from 1,305,000 at the end of 2010 to 1,313,200 at the end of the March 2011, signalling a strong appetite from investors and an increased willingness to lend from the banks, which are lowering loan-to-values and offering increasingly competitive rates.
Davies comments:
“Many of the lenders that scaled back or retreated from buy-to-let lending in 2008 are now returning and the increased competition means that rates available to investors are becoming much more attractive, starting from around 4% for a fixed mortgage and 3.3% for a variable-rate. This makes buy-to-let investments more viable than they have been for the last couple of years and allows landlords in London to achieve average yields of 4-4.5% whilst benefitting from the longer term capital appreciation of their properties”
Chesterton Humberts has witnessed average rental prices in London and the South East increasing by 10% over the past year, driven largely by what has been called ‘generation rent’ – a generation of aspiring first-time buyers unable to save for a deposit that are being forced to rent. But Davies predicts that this figure could reach in excess of 15% as the summer rental market takes off.
He comments:
“Historically, the summer months generate high levels of rental activity as graduates migrate to London from their university towns and families rush to find a home prior the start of the academic year in September. This is a very good time to consider buy-to-let as an investment, whether it be a first time landlord or a professional landlord looking to expand their portfolio. However, they should do so sooner rather than later in order to take advantage of the strong summer market, which should allow them to achieve high rental levels with tenants committing for longer periods i.e. one to two years.”
Dependent on the level of investment, popular family locations that boast highly regarded schools range from the central London areas of Chelsea and Kensington to the South West London neighbourhoods of Barnes and Putney. New developments also prove popular with young professionals migrating to London, like Packington Square in Islington, which offers professional tenants a short commute into the City.
Davies concludes:
“No matter how strong the market, investors should always be selective about the properties they buy and ensure that they get a trustworthy, ARLA-registered lettings agent to advise on a realistic lettings value and the general rentability of a property before they commit to buying.”
For more information visit: chestertonhumberts.com
