The buy to let market is booming as many landlords apply for refinance in order to expand their portfolios.
Since the spring, property investors have been enticed by strong demand from tenants and rising rents. In fact the average rental income in the UK has risen for seven successive months and reached a new monthly high of £713 in August.
Between April and June, buy to let landlords took out 32,000 mortgages to the value of £3.5 billion. That’s a 21% increase on the first quarter of 2011 and the highest number since Q4, 2008. 65% of these loans were for remortgages.
John Heron, from buy to let lender Paragon, said the main reason why landlords remortgaged during Q2 was to raise capital. Around 66% of private rental properties are not mortgaged and the average LTV on those that are is 48%. Landlords are looking to utilise the huge amount of equity that exists in the rental sector in order to grow their portfolios.
The most popular area for buy to let purchases is currently London, but landlords are also favouring Birmingham, Manchester and Portsmouth.
According to property investment advisers, Assetz, more than 75% of its investors are thinking about purchasing more investment properties in the coming 12 months and they say strong demand from tenants is one of the primary reasons for adding to their portfolios.
Property investors are also starting to return to the new-build housing market. Nick Vaughan from Hamptons International explained that new-builds are now priced more sensibly and provide a decent yield.
Skipton Building Society currently offers the best buy to let deals with a two year 60% LTV tracker mortgage at 3.24% plus fee of £1,240.
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