Buy-to-let is 'an attractive investment'
by Daniel Jones
More property owners are signing tenancy agreements
because buy-to-let is such an "attractive investment", it has been claimed.
David Lawrenson, private rented sector expert at LettingFocus.com, believes rising rents across the UK have tempted many people into becoming landlords. Some, he argues, are renting out their property because doing so provides a higher return than leaving money in the bank.
"The net yield achievable can be about 4.5 per cent or more and from that view it is quite an attractive investment. Chances are that the property's value won't go down, so you are getting a good yield as well," explained Mr Lawrenson.
His comments follow a report indicating a rise in the number of "reluctant landlords", who are renting out their homes because they cannot find a buyer. The study from the Association of Residential Letting Agents (Arla) showed a sharp rise in this trend as credit for mortgages dries up and the difficulty facing first-time buyers increases.
Nearly half (47 per cent) of Arla member agents surveyed reported a rise in the number of 'unplanned' lettings during the third quarter of 2011. This was up from 40 per cent at the beginning of the year
Arla suggested that homeowners are turning to the private rented sector because they cannot sell their property or because they are holding off until a higher price is achievable.
Mr Lawrenson said he was not surprise by the findings. "One driver will be the factor that there have been a lot of reports in the press about the rents going up strongly, especially in London," he explained.
"Therefore it is quite an attractive thing to do, especially if they are in a position where they have perhaps been trying to sell their house and couldn't."
Published on: January 10, 2012
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