Mortgage
brokers across the UK have seen a rise in first-time landlords according to a
survey by buy-to-let lenders Paragon.
Paragon’s
survey of brokers and intermediaries found that 27% of buy-to-let mortgage
applications in the third quarter were from first time landlords, compared to
22% in the second quarter.
Six out of
ten brokers surveyed said that they thought buy-to-let finance was now more
available compared to the previous three months.
John Heron,
managing director at Paragon Mortgages, says: “As demand for accommodation continues
to grow, we have seen a steady rise in the number of first-time landlords
entering the sector, drawn by the potential for attractive yields.”
"First-time
landlords have been an important source of growth at a time when more
established landlords with larger portfolios have found themselves constrained
by limited equity.”
It is hardly
surprising that more people are trying to get in on the opportunities
buy-to-let presents, landlords in England and Wales received an average return
of £12,129 in the year to September, according to figures from LSL Property
Services.
That figure
is made up of £8,164 in average rental income, plus a further £3,965 in capital
gain on the property value.
David Brown,
commercial director at LSL, explains the attraction. “Both rents and property
prices are rising and there is every indication the next year is set to heat up
even further.”
The figures
represent an annual return of 7.4%, nearly 15 times the current base rate of
0.5%. In the coming 12 months, landlords could get a total return of a
staggering £23,028 if both rents and property prices continue at the same pace.
The increase
of first time landlords is further indication of the private rental sector
continuing to grow and defy critics, although many believe that the
introduction of Help to Buy phase 2 could be a game-changer for buy-to-let.
“Some
tenants who couldn’t afford to buy before will definitely be able to buy now.
This could finally put the brakes on the pace of growth in the private rental
sector, as more tenants achieve their dream of home ownership.”
If you are
looking to become a landlord for the first time, then make sure you get
specialist landlord insurance. Get a quote today from Discount Landlord.
Richard Anthony
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