The total amount of buy-to-let investors in the UK has increased by 8% in the past year, to 1.63m, revealed letting agent Ludlow Thompson.1
The net income, rental income minus all costs, of these landlords grew to £13.1 billion in 2012-13, 8% more than the £12.1 billion seen in 2011-12.1
The record low interest rates on bank deposits, and Government bonds, have helped the sector attract new investors, as they find it difficult to achieve comparable returns from other investments or savings products.
Ludlow Thompson believe that 5-6% yields are still achievable on investment properties in some areas of London.1
Capital growth on residential property was over 7% in 2014, and 16% in London, although the FTSE 100 rose by just 0.7% in a year.1
Chairman at Ludlow Thompson, Stephen Ludlow, says: “The high yields on offer from buy-to-let investments make this asset class one of the few options for investors who want to avoid the volatility of the stock market. A fall in inflation has also calmed fears of a sharp rise in interest rates.”
He also says that recent regulatory changes in the mortgage market are making first time buyers struggle to obtain mortgages, meaning that they have to stay in rental property for longer.
He concludes: “Also, pension changes announced last year should allow potential investors to use these funds for a property purchase, offering far greater yields than pension funds.”1