Ever since the late 1990s the buy-to-let market has been a dynamic and lucrative sector for investors looking to build wealth through property ownership.
However, like all asset classes, it is not immune to fluctuations and changes. In recent years, the landscape of buy-to-let mortgages has seen several notable shifts that have both challenged and offered opportunities to investors. So, is now a good time to invest in a buy-to-let? In short… yes.
With mortgage rates having risen sharply (followed by a gentle softening), you’d be forgiven for asking if now is the right time to purchase an investment property. It’s important to note that whilst there has been an increase in lenders’ rates, this will only make tenant demand grow stronger as people initially looking to buy may now turn to renting instead due to stricter affordability criteria. Other factors such as a lack of choice in the sales market could also impact movers’ decisions to rent a property instead.
There’s no question that demand remains ferocious for rental properties, mainly due to the lack of available properties. This presents an opportunity for landlords to achieve exceptional yields. Since 2019 the market has seen a 50% increase in applicants registering to rent, and due to the low supply, rents have increased by a staggering 12% for the last two years running. 80% of the properties we are listing receive offers from at least three interested parties (with 27% of those willing to pay over the asking price), meaning landlords are spoilt for choice when it comes to deciding on their ideal tenant.
We have seen mortgage rates settle within the past month with more products available from a greater choice of lenders. Combined with demand for rental properties, a surge in rental prices and the long term capital growth of the property market the benefits outweigh the drawbacks. Since there are a number of factors to consider when purchasing a buy-to-let property, such as location, rental yield and condition of the property, having a knowledgeable estate agent by your side and a mortgage broker who will search the market to find you the best product is paramount to the success of your investment.
To find out more on buy-to-let mortgages, get in touch with our recommended mortgage brokerage; Milliner Financial Services.