Quick House Sale Blog. Home Buyers Blog

Quick Move Blog

Wednesday, 12 September 2007

Buy to Let - Boom to Continue?

Despite today's announcement that several buy to let lenders are increasing their interest rates, a new report from the Royal Institute of Chartered Surveyors (RICS) suggests that the boom in buy to let is set to continue.

The report suggests that persistently high house prices and unsettled market conditions means that rental demand will continue to rise. The buy to let market is continuing to grow at the fastest pace in history, seeing rental demand soar in line with rising house prices as a low-cost, temporary solution.

The currently high UK interest rates have put the price of borrowing beyond many at the lower end of the market, with house prices continuing to grow year on year beyond the reach of those looking to get on the first rung of the property ladder.

As a result, more and more people are turning towards rental property for financial reasons, combined with an upsurge in investment in property, seeing growth in the sector remain strong over the last few years. Furthermore, with the popularisation of the buy to let model in the media, it is proving continually stable in terms of growth from investors.

Additionally with rental income rising at the fastest rate ever recorded, there is no sign of any slowdown in investment in rental property for the foreseeable future as interest rates continue to suppress new home buys and consumer mortgage applications.

However the tightening credit environment derived from the US sub-prime sector looks likely to begin to have an impact on the availability of buy to let mortgages in the UK, which have until now been readily available even to first time investment borrowers.

With banks fearing tying up liquidity against long-term mortgages, analysts are predicting that investors may find they have to work harder to secure initial investment finance against a buy to let investment project.