Low Saving Rates to Boost BTL Investment

Experts predict that buy to let market might experience a burst of activity as the interest rates on saving accounts are at historic low in the United Kingdom.

According to estimates, an average interest rate on a saving account now constitutes 1%, which means that many people might find it rational to invest money in residential property (which is now priced very low) rather than to keep money in banks that offer practically nothing in terms of profit.

Experts argue that the annual yield from investment into the BTL sector has increased in the past 12 months: it now amounts to 6.2%, which is 6 times higher than the interest rate, offered by most banks. Another fact that speaks in favour of investment in the residential property sector is the price of houses and flats, which has reached its bottom. The majority of estate agents believe that it is just the right time to get great deals. Recent reports for the first quarter of 2009 reveal that more than 25% of buy to let investors plan to invest more money in the residential property sector later this year. These results can be explained by low lending rates and property prices. Another report, published by the Association of Residential Letting Agents (ARLA) suggests that most landlords hope to hold to their properties for at least 16 years, which means that they plan to stay in the buy to let business for a long time.

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