Buy to let sector strength continues

Published: January 28, 2008

Demand for buy to let mortgages looks set to increase this year, with new figures revealing growing rents, yields and portfolios over the course of 2007.

Data published by Paragon Mortgages indicated that growing demand for rental property meant that landlords' incomes rose by 2.5 per cent last month, contributing to an annual growth rate of 19.4 per cent.

At the same time, gross yields increase to 6.2 per cent in December, after five months at six per cent, while total investment returns for landlords over the course of 2007 stood at 21 per cent - compared to 7.2 per cent the previous year.

John Heron, managing director of the company, said: "Buy to let provides accommodation for many people, particularly in the current environment with people choosing not to buy but rent instead. This presents a good buying opportunity for investors, who remain upbeat about the future.

"Buy to let has certain counter-cyclical characteristics which mean it will remain resilient,and indeed will outperform the market, at times of lower economic confidence and growth."

Research published by Hamptons Mortgages earlier this month revealed that demand for buy to let mortgages rose by 23 per cent in 2007, with products now representing nearly 39 per cent of the UK's mortgage market.