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The state of the housing market
Since the bubble burst on the British housing market as the recession finally engulfed the world, the housing market has not been ‘as safe as houses’ for investors. Many properties have fallen into negativity and right now the only region of the UK to experience any growth is, surprise surprise, London. Investors have been leaving the market well alone. Which is rather strange. There are more people chasing every rental property now than there have ever been and council house waiting lists are off the charts. However, as private mortgages have dried up, so have buy-to-let mortgages.
Banks have been unwilling to lend, to anyone, whether they are an investor with a large portfolio or a family of four. The housing market needs to bounce back if we are to ever enjoy growth rates of the same magnitude as those prior to the recession. However, there is hope around the corner.
Kensington Mortgages has recently unveiled a 85% LTV buy-to-let mortgage which helps new developers get on the investment ladder. Other high street banks are now keen to follow suit after they have seen the huge demand placed on the Kensington Mortgages offer. The buy-to-let market is highly lucrative; banks are now seeing this so this could be a good thing for everyone, including people in the market for private home buying.
More good news for buy-to-let investors came in February when the Council of Mortgage Lenders announced buy-to-let mortgage lending increased by 7% in the UK in 2010. Proof that the market is indeed lucrative was revealed in the Council’s report that showed that buy-to-let mortgages in 2010 were worth £152 billion. This was fuelled by a continuation in low interest rates and a growing demand for rental property.
However, the Bank of England may be forced to raise the base interest rate later this year to try and cool the runaway inflation as price on everyday items skyrocket. The jury is therefore out, but one thing is for sure, rental demand isn’t going anywhere but up as mortgages are quite simply unaffordable and first-time buyers continue to be priced out of the market. So if more banks decide to follow Kensington Mortgage’s lead, then the future could be good for buy-to-let investors in 2011. If you want to investigate buy to let insurance options check out Legal & General.
