Twenty to thirty year olds may be struggling to gain a foothold on the property ladder, but the same cannot be said for landlords—according to a report in the Daily Mail this morning, more than 1.4 million UK mortgages are now buy to let (around one in eight), which is the largest number ever recorded. Ten years ago, only 2.4% of mortgages in the UK were taken out by landlords, but today the situation is completely different and 12.7% of the mortgage market is made up of buy to let loans.
The Conservative Housing Minister, Mark Prisk, recently described the UK housing market as “dysfunctional”, which given that millions of young people cannot afford to rent a home let alone buy one, is probably not that inaccurate. Of course part of the problem is that affordable first-time buyer housing is being snapped up by landlords, which is pushing prices up. Consequently many people these days are not in a position to buy their own home until they are well into their 30s.
Why is ‘buy to let’ becoming so popular?
Savings rates are currently a pathetic 0.5%, so sticking your spare cash into a savings account is not going to give you much in the way of interest. Investing cash in property, on the other hand, offers a far more attractive return on your investment. Demand for rental property is high (because of the lack of affordable housing) and with the average rent around £714 per month, it is possible to make a good living from being a landlord.
