With the ever-increasing difficulty of securing a mortgage it is no wonder that so many are turning to renting accommodation as a way of keeping a roof over their heads. However, such high demand has pushed rents through an impossibly high ceiling, seeing the monthly rate at over 1,000 pounds for the first time. This is a twelve per cent rise in the last six months and the trend is likely to continue.
A third of landlords say that demand is high and the buy to let property market remains strong with the average home at just under 200,000, pounds an increase of eleven per cent since March 2007. This is all very well if you can afford the mortgage in the first place and have not recently invested in a buy to let property in the hope of making a quick buck. It also means that you need to be able to cover mortgage payments
for at least six months if your tenants should have a problem paying their rent or the property remains empty due to high rental prices.
The UK's biggest buy to let property mortgage lender, Bradford and Bingley, have themselves been experiencing problems of late. It has announced to its investors that the number of mortgages in arrears has jumped and is likely to continue in the same vein, although the buy to let property mortgages accounted for only one per cent of their total loans. Bradford and Bingley have seen a drop in their share value by twenty six per cent and this has prompted an injection of help from the government, although they are keen to stress they are not experiencing the same problems as Northern Rock.
Savers with Bradford and Bingley are being urged not to panic as their money is protected to the tune of 35,000 pounds per customer by the Financial Services Authority and they are keen to carry on business as usual. Buy to let property mortgages are still available and the bank will continue as before.
Buy to let mortgages have increased dramatically over the last ten years due to the difficulty of being able to get on the property ladder and more people looking to renting. However, since then, mortgage rates have gone up and some people are struggling to meet the repayments despite the rise in rents. Those borrowing to purchase buy to let property have decreased in recent times due to the risky property market but if you can comfortably afford it then it is still a good investment.
The demand for more property could, in part, be due to the influx of migrants into the UK who are all looking for accommodation without mortgages. It is expected that the UK population will grow by a further 4.4 million in the next eight years and will grow to a staggering 71 million in the next twenty years. All these people will need rented accommodation in one form or another so if you can afford a property to let, then it is still a wise investment.
Government estimates put the figures at five million new homes that will be needed in Britain over the next twenty years and one and a half million of those will be due to overseas immigrants. This is sure to put pressure on those in the UK already needing accommodation and as such, now is a good time to purchase a buy to let property if finances allow.
