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Why now is a good time to invest in buy to let

Why now is a good time to invest in buy to let

The buy to let market has been put under strain recently with the recent stamp duty hike for 2nd homes and the tax changes. You would assume buy to let mortgage rates would have a sudden increase to sting landlords more, however the opposite has actually occurred. Mortgage providers have actually reduced rates in order to tempt landlords to purchase prior to the stamp duty changes.

According to the average 3 year buy to let rate has dropped from 5.78% to 3.87% over the last 4 years.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

Property still remains one of the most secure and profitable investments you can make. In the current market demand is definitely outstripping supply and it has been this way for a while. One of the big reasons for this is young people are really struggling to get mortgages due to the strict criteria being enforced by lenders. This has resulted in the number of UK households living in rented accommodation rising substantially in the last 10 years. Research has shown that only 26% of young adults will own their own houses by 2025 and they are being labelled “generation rent”.

Of course there are a number of other factors which have resulted in the increasing number of people renting- many large employers will now only confirm 6 or 12-month employment contracts in an area which means people are not in a position to committing to buying in an area. We also have quite a lot of applicants who have sold and want to rent in an area for 6-12 months, sometimes longer, before they commit to buying.

In the current market, you can expect to achieve between a 5-8% rental return over mortgage repayments which is more return on investment than you can currently expect to achieve on things like stocks and shares, savings accounts and bonds.

Investment properties can also make a useful retirement plan when current pensions are underperforming. Landlords with this aim may have a portfolio of properties where the rental yield provides them with income or they may have a property which they have owned for a number of years- benefited from the rental income and then sell once the property has grown in value. They then have a very nice lump sum as a pension pot.

In conclusion, property is still one of the best investments you can make but it does require careful planning to make sure you make the best financial decision.

If you would like to discuss further investment opportunities in Birmingham then please give us a call on 0121 445 7410 or email

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