One route that is set to boom this year is investing in the buy-to-let market, one of the few sectors of the UK housing industry that is thriving.
Whilst the wider property market has felt the impact of economic uncertainty over the last few years, recent data has revealed that in the UK, rents have risen by 13.6 per cent since 2009 with predictions that they will continue to rise this year.
Across the country, we can see significant demand for rental properties as many are struggling to get onto the property ladder. According to the latest Census figures, in the past decade the number of UK households renting has increased from 31 per cent to 36 per cent. Alongside this, capital values have in the most part fallen or stagnated. It is clear to see why renting a property is an attractive option for many looking to increase their income.
However, whilst renting a property can seem like an attractive prospect and a great way to start a larger investment portfolio, potential investors need to consider this carefully. In particular, these potential landlords need to ensure that they find the right financial product for their individual situation. The value of properties and potential yields that can be generated vary across the country, therefore it is important that investors select a product that suits their short and long term needs such as a pre-approved auction purchase product that provides them with the knowledge and comfort that the funding to purchase the property is in place before bidding. Landlords might also wish to renovate or refurbish a property ahead of letting it out. A bridging loan may be suitable product to enable this – adding value to a rental property following renovations and improving the rental yield.
It is not only investors who need to be catered for. In 2012, we also saw the rise of the accidental landlord. This growing breed of homeowner, as the name suggests, are people who are bought a property without the initial intention to let it. These include people who do not want to sell in a weak market, couples who decide to cohabit but do not wish to let go of their independent properties and parents who have bought properties for their children to live in whilst studying and then wish to make a profit. It is important that consumers such as these also have the financial product best suited for their needs.
As the buy-to-let industry booms, so does the number of lenders expanding their portfolio of buy-to-let products, including many high street lenders. Whilst many consumers might be tempted by the straightforward option of just walking into their local bank or building society for a mortgage, for many this might not be the best option.
Many of them also may have difficulty securing funds from traditional lenders due to restrictive criteria. However, alternative lenders, with our flexible criteria and affordability focus, are able to keep the door open for these consumers who want to cash in on this lucrative opportunity and boost their incomes.
