There’s no denying that landlords have been dealt some heavy knocks in the past few years, including being on the receiving end of some rather unpleasant tax changes.
This reduction in tax relief, along with higher stamp duty rates and tighter lending criteria for those buying investment properties, has resulted in naysayers raising their voices and calling the end of buy-to-let.
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But such negative voices are overlooking the attractive elements of the sector. Here are the three top reasons why the future still looks bright for buy-to-let.
1. Record low interest rates
The rate at which landlords can borrow money to invest in bricks and mortar has never been so appealing. Interest rates set by the Bank of England are currently at historic lows of only 0.25 per cent, which has lead to buy-to-let mortgage rates of less than 2 per cent.
This means means landlords can be paying as little as around £150 a month on a 25-year term mortgage of £100,000 with a rate of 1.8 per cent.
2. Tenant demand
While it’s true that lenders are imposing stricter lending criteria, this isn’t just limited to landlords - first-time buyers are also feeling the pressure from banks.
Those looking to take their first step onto the property ladder are being forced to delay their purchase as they build up their savings needed for a deposit. Most will need to continue renting in the meantime, which is good news for landlords who have an on-going revenue stream.
3. Rental yields
Perhaps the truest measure of success for a buy-to-let property is the rental yield – the amount of money you’re making back in rent.
While some areas have levelled out recently, the latest Your Move buy-to-let index found that rents continue to rise in most areas of the country, with commuter belt towns providing the highest rental yields in the UK.
So while some think the buy-to-let boom is at it’s end, there’s still room for healthy growth in the sector – so long as you’re smart about how, when and where you invest.