As Rental Yields Boom More First Time Landlords Look To Buy

First time landlords are starting to form a major portion of Buy To Let enquiries received by Mortgage Brokers. This is perhaps not surprising as a subdued residential property market is combined with ever increasing demand for property to rent as young people look for more flexibility while the economy recovers.

Rental Yields As High As 6.3%

First Time Landlords

First Time Landlords

Rental Yield is simply a calculation that allows you to work out the rent when compared to the value of your property. The higher this number the more money your property is making you relative to the money that was required to purchase it.

For example a yield of 6.3% on your buy to let property of a value of 100,000 would mean 6300 pounds of rent received per annum. Divide this by 12 and your monthly rent is 525 pounds.

With the base rate set to remain low for the medium term, property prices falling and demand from tenants showing no signs of dropping, investors will continue to capitalise on the healthy returns available from the buy-to-let market.
David Whittaker commented while revealing the Mortgages For Business Research to Mortgage Solutions Magazine

As Many As 30% Of Enquiries Are From First Time Landlords

Mortgage Introducer Magazine revealed that a survey conducted by Kensington Mortgages showed that well over a quarter of enquiries are rookie landlords.

There is certainly some appetite from first-time landlords who look to enter the buy-to-let market, attracted by the potential returns and strong demographics that underpin the sector.
Alex Hammond From Kensington Talks to Mortgage Introducer

The important thing all new landlords must remember is that whilst yields are clearly very solid and the choice of products combined with low interest rates look very appealing the economy is still tough. That very tough economy will make significant capital appreciation – once the engine of the Buy To Let Boom of a few years ago – very unlikely.

On top of that landlords may face an increased number of rental voids in some parts of the country as unemployment, inflation and a lack of pay increases takes it’s toll on some tenants. It will be increasingly important for landlords to have suitable rent insurance.

Another reason we are seeing so many more first time landlords is the increase in popularity of renting out the home applicants are currently living in to allow them to move. This increase in popularity is driven both by the appeal of these buy to let yields at a time when investment yields are low combined with a feeling amongst many people that they would be able to sell their property for more money once the market recovers and let to buy is a good way to ‘ride out’ this interim period but still allow the family to move to a larger home.

If you want to discuss your first buy to let property and get some advice on rates, rent required or even letting out your home to allow you to move then complete the form below for advice from our expert advisers.