New landlords 'will struggle to purchase buy-to-let properties'

News Category: Management

This article was brought to you by Rentman the premium rent management software.

While the buy-to-let market is becoming increasingly inaccessible for new landlords, existing ones can still make good returns, a new report has indicated.

Rics found that high interest rates meant that it was becoming prohibitively expensive for new landlords to pick up buy-to-let properties and turn a profit.

Indeed, the organisation calculated that a would-be investor would now have to lay down a deposit of £65,600 (30 per cent of a property's value) to get a foothold on the buy-to-let ladder.

Just five years ago, landlords would only have needed around £10,100 to buy a new property.

"Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined," explained David Stubbs, Rics senior economist.

"However, existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones, and this should ensure that demand from the buy-to-let sector does not dry up entirely."

Going forward, Rics suggested that rents will rise strongly and that yields will grow slightly.

Find out more about letting agent software.