Earlier this year, we saw yet another boom in buy to let, according to the Council of Mortgage Lenders. Loans to landlords rose 62% by volume and 87% by value over the course of the past 5 years. See suitable websites.
Buy-to-let now makes up 11% of the entire mortgage market – not bad for an idea that has existed for a number of years. After a brief pause for breathe at the start of 2005, with a record 177,800 gross advances in the second half of 2006. Overall, the year saw 330,300 worth £38.4 billion.
How far can it go?
Can the boom go on? So far, public appetite for buy to let seems to be insatiable. While many professional investors may be focused on long-term rental returns it is hard not to believe that many are looking entirely on capital growth, particularly when gearing can multiply that many times over.
Investors are winning
For lenders, buy to let represents a highly profitable new area with, so far, very little risk. The rate of repossession is marginally higher than in the traditional mortgage market but arrears are lower, and lenders have the option to appoint a court receiver to carry on collecting rents. View more information.
The consequences are becoming increasingly clear though. Private renting rose by 40% between 2010 and 2017 whereas the number of people buying with a mortgage fell.
Up to half of new-build apartments in big cities are being bought by investors and acceleration in the redistribution of wealth to existing home owners.
Making your own profit
Becoming a property developer is a great way to be your own boss and earn money in such a booming market!
You’ll have to understand what the current demand is within the market, but starting your project is easier than ever as private lenders are offering finance solutions to those who have been rejected by banks. If you have been rejected previously, take a look at the lending process from a private team.