Buy to Let Doing Well

The stricter lending criteria for mortgages is helping the buy to let market with demand increasing from those who are choosing or having to rent. Rental incomes could rise by 14% this year.

Earlier in the year buy to let property was expected to come to a sticky end with landlords defaulting on their mortgages but the market is looking much better because of the drop in mortgage approvals and the number of people now turning to rented accommodation.

The Council of Mortgage Lenders expects the buy to let sector to be the least affected group in the weakened housing market. The Bank of England stated this week that new mortgage approvals fell to a two-year low last month.

The average rents are expected to rise around 7% in 2007 and 6% for 2008. If the interest rates were to fall to 5% by the middle of 2008 as expected this would improve rates of return for investors.

The Council of Mortgage Lenders considers that a lack of property on the market will still be an important factor and will underpin prices though it may not be sufficient to stop prices from falling in some areas and for some types of property.

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