Buy-to-let continues to perform well

News Category: Industry News

Despite rising borrowing costs, the buy-to-let market remained robust in July, new figures suggest.

Data from Paragon showed that strong demand for rental property meant that landlords have been able to increase rents to cover the costs brought about by recent interest rate increases.

Indeed, the figures indicate that average rents rose by 3.04 per cent in the last quarter - giving an annual rate of growth of 12.7 per cent.

Over the year, yields for landlords in the UK have remained around the six per cent mark. In addition, house price inflation means that the typical value of a landlord's property is now £181,533.

This means that annual total returns, including capital gains plus rental income, reached 11.6 per cent.

"As owner occupiers are increasingly struggling under the weight of higher borrowing costs, buy-to-let landlords can provide accommodation for the growing number of young people who want a flexible lifestyle or who aren't yet ready to stepon the property ladder," added Nigel Terrington, chief executive of the Paragon Group.

"Buy-to-let provides housing for young people, who otherwise would be forced to buy and be stretched beyond their means. It would result in dramatically higher levels of repossessions in the housing market."

Recently, the Landlord Association suggested that landlords in the UK were confident that the rental sector would continue to perform strongly.