Since 2007 when the financial crisis hit, buy-to-let has offered a good investment. With high house prices and continued difficulties for first time buyers in obtaining a mortgage, there is still keen demand for property within the private rental sector. With properties unlikely to stand empty and with the opportunity for landlords to charge higher rents, buy-to-let remains a financially sound business venture. So what lies ahead for the buy-to-let market in 2013?

An Expanding Market

An Expanding Market

More leniency towards rent rises

Although rents have risen over 4% per year since 2009, research suggests that in 2013 landlords might show more understanding towards their tenants. A recent survey of landlords in Britain showed that 60% were planning to place a freeze on the rent they charge this year. Holding their rental charges at more reasonable levels will help landlords to hold on to good tenants and removes the inconvenience of finding someone new, who may not be as reliable.  Longer rental contracts may also become more common for the same reason.

Yields remain high

Even if rents don’t increase further, yields are set to remain high and predicted to be similar to those from 2012. Landlords can expect an average yield of 6.2%, though for one in ten this will rise beyond 10% according to figures from the Letting Index for 2012.

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Hot spots for rentals

If you are wishing to maximize your investment, consider one of the areas identified as having the greatest demand for property. At the top of the list sits London’s sought after Pimlico and Victoria areas, followed by attractive Maidenhead in Berkshire. However, Canary Wharf, Cambridge, Aberdeen and Inverness are also tipped as good bets for new landlords or those wishing to expand their portfolio. Generally, areas served by good transport links and those that offer a wide range of employment opportunities have a lot of potential for attracting tenants. However, if you are looking to target a certain group such as students or young families, choose your area in relation to its demographics.

An expanding market

According to a survey by a major UK lender, a third of buy-to-let landlords plan to take on further properties during 2013, forecasting further remortgaging and purchases amongst this landlord group. This highlights the confidence amongst those investing in buy-to-let that it is going to be another prosperous year. Tenants are also set to benefit, as with increased availability of properties from which to choose, those in a better financial situation and who have a good track record will be able to pick the cream of those on offer.