Buy to Let in the UK

With the fast growth in the property market came the remarkable rise in demand for rental properties. Over the past few years, the buy to let occurrence has led to higher house prices, prompting many to put their money in buy to let investments. One of the advantages of buy to let is that it provides a long-term opportunity to earn considerable profits and a secure future.

For many years UK landlords have put their money in residential property to be let for income. But since the mid 90s there has been a swift growth in the property market bringing about a notable surge in demand for rental accommodation. This opportunity has been taken advantage of by many mortgage providers keen on persuading individuals to become landlords by taking the first step using a buy to let mortgage.

The buy to let phenomenon has driven house prices higher over the past few years while making available a wider section of rental accommodation. It has also prompted many people to invest in buy to let properties as a long-term opportunity to reap significant returns and to secure finance for their retirement goals.

What is buy to let?

The term buy to let can mean two things. For one, it can refer to an investment strategy of purchasing a residential property to be let for income. Buy to let can also refer to a specific category of a mortgage typically used to buy a property for letting to a third party. Buy to let mortgages are for individuals who want to invest in the property market by buying one or more properties and then letting them out to tenants.

The popularity of buy to let mortgages has been brought about by the following factors:

* The appeal of having property as an excellent and stable long-term investment
* The offering of competitive, exclusively-designed, and accessible buy to let mortgages to make things simpler for the landlords
* The high demand for rental accommodation prompted by an increase in the general UK population, high divorce rate and an increasing number of higher education students

Purchasing a buy to let property for letting can provide benefits to a landlord in two ways. First, it can provide a steady stream of income. Second, he stands to gain from the potential for long-term accumulation of capital growth.

Where to find your buy to let

Finding popular areas will produce the highest rental yields – or the annual rental returns as a proportion of the property value or mortgage – has become extremely significant. The secret is selecting the right location.

Online estate agent propertyfinder.com revealed that York and Cambridge are two of the most popular search terms on its site. But The Property Show claims that Nottingham has the best yield at 10.19%. According to estate agent Haart, now that property prices have declined by 15% across Nottingham, buy to let owners are almost guaranteed to get rental yields above 8% in key areas.

Buy below market value

For many sophisticated property investors, the main trick to earning significant returns is by buying a property below market value especially from a distressed seller, or a homeowner who looks for a fast deal and is often willing to accept prices much lower than the market value. Distressed sellers are often prompted by life events such as death in the family, recent divorce or moving into another property.

Below market value properties can often be located with the help of newspaper advertisements, leaflet drops or through property auctions where there is an abundance of repossessed properties, or homes whose owners have become incapable of paying monthly mortgage dues and thus had their homes repossessed.

Many experts claim that the current market will see thousands of repossessions – providing an opportunity for investors to pick up bargains which they can convert into buy to let properties.