Buy-to-let a safer home for savings

Buy-to-let is on the rise once again as people turn to the UK lettings market as a safe place to invest. Placing their savings in a buy-to-let property seems a more reliable way of building up a nest egg for their children than leaving it to languish in the bank or playing the stock market.

A report in the Mail Online shows the example of the Howard family who are releasing equity from their 4 bedroom home in Huntingdon, Cambridgeshire to invest in the buy-to-let market in Peterborough.

Encouraged by the relaxation in lending criteria for buy-to-let loans, which has seen an increase in higher loan-to-value – or low-deposit – mortgages, the couple are now looking for rental property.

“We bought our four-bedroom house in the late Nineties so have seen it more than double in value since then.” says Michael, a 41-year-old IT worker who, along with his yoga teacher wife, is releasing £100,000 in capital from their home.

“It’s a good time to be a landlord as buy-to-let deals are getting better every day, but it is still difficult for first-time buyers and I doubt we’ll have trouble renting to them, says Michael. “Although we see it as a long-term investment to help our children pay off university debts, rental yields are attractive, too.”

Investing in buy-to-let is one of the few ways to make money from property now. The Howards are typical of the increasing band of have-a-go landlords profiting from first time buyers’ inability to afford the hefty deposits needed to get on the property ladder.

Figures from the Council of Mortgage Lenders show that the past quarter saw the highest number of buy-to-let mortgages (34,500 of them, worth £3.8billion) taken out for three years. With average UK rental yields at between five and six per cent, buy-to-let properties offer savers a good return.

Richard Gordon of UKPIS said: “The rise in buy-to-let investing makes perfect sense as a combination of factors makes it the ideal time. Low interest rates for savers, volatile stock markets, increasing demand from tenants unable to raise a purchase deposit, a wider range of buy-to-let mortgages available and property prices at or very close to the bottom of the economic cycle. Quite frankly, where else are people going to invest their savings?”

Read the full Mail Online report here.