The buy to let market still looking strong

Even with the recent interest rate raises the buy to let market looks strong with UK investors being drawn to the rental sector in the search for strong returns.

The council of Mortgage lenders reports an increase of 48% in buy to let mortgages taken out last year. Figures show that there were 330,000 buy to let mortgages taken out last year with a collective value of £38.4 billion pounds.

With the current higher interest rates and high house prices it is forcing more would-be first time buyers to continue renting as they are being priced out of the housing market. The high interest rates are actually having a positive effect on the market, by increasing demand for rental property.

However buy to let investors are not having it all their own way as it puts pressure on them to make yields on rental returns to cover higher mortgage payments. Over the long term returns look good as property prices continue to increase but short term returns can be harder to make.

The rental sector is also becoming more specialised with renters looking for exactly what they want, with young professionals increasingly willing to pay higher rents in order to enjoy a better standard of living. They cannot afford to buy the properties they would like to live in, but they can afford to rent them.