UK Buy to Let Property Market on the Rise

The recent survey, which was conducted by Paragon Mortgages, suggests that it is tenant demand that makes rental yields in the residential rental property sector grow steadily. The survey, held among experienced UK landlords, reveals that rental yields reached 6.4% in 3 months to the end of June 2009 – a slight increase on the 6.2% level marked in the first quarter of this year. Despite the fact that the increase of 0.2% is not statistically significant, experts are determined that steady increase in property rental yields, which is taking place for the second successive quarter, is a sign of market growth and of the end of market stagnation. Moreover, the figure is believed to demonstrate the return of buyers’ confidence in the buy to let market. According to the results of the survey, 30% of the respondents expect tenant demand to increase further, while the vast majority – 50% of respondents – is determined it will stabilize in the near future. In the opinion of Mr. John Heron, managing director at Paragon Mortgages, the fact that mortgage lending is still scarce means that the British find it difficult to purchase property or that they are unwilling to commit themselves to it in the kind of economic environment, which is currently in place, and makes them turn to landlords’ services. Mr. Heron added that landlords and property investors will be attracted to the buy to let sector not only because of the high rental yields and steady demand but also because of low savings rates, offered by UK banks and stock market volatility. Meanwhile, the National Landlords Association (NLA) is reminding all landlords, operating in the Sale and Rent Back sector that they have only a few days left to apply for FSA permission for this kind of business.