The UK’s buy-to-let sector retains its appeal with strong investment criteria of high demand and low supply.
- A significant amount of the UK’s landlords report tenant demand is ‘booming’
- The UK’s private rented sector offers strong investment criteria with huge tenant demand playing a big part in this
- Given these strong fundamentals, landlords do not need to rely on tax breaks to generate high returns
Some landlords were left looking at their balance sheets following George Osborne’s Budget speech at the start of the month.
Changes to the way in which buy-to-let landlords offset their tax with interest payments may have had the effect of reducing net yields, but those landlords using solid investment criteria to generate their returns will have no such issues.
Research by specialist buy-to-let lender Paragon Mortgages has highlighted the continued opportunity in the sector, with tenant demand reaching all-time highs.
The size of the UK’s private rented sector has already doubled to four million households and the new research states 43% of landlords think demand is either growing or booming. More than half of these landlords expect the market to still be growing in 12 months.
Managing Director of Paragon Mortgages John Heron said: “It is no surprise that rental demand is steadily increasing. With continued stress on the housing stock driving prices up, tough affordability hurdles for would-be buyers and a social rented sector under pressure as a result of renewed interest in right-to-buy, a steady increase in rental demand was practically inevitable.”
Property investment has a history of short and long-term high performance, generating higher returns than all other investment classes both in the past 12 months and over the last 18 years.
By continuing to rely on strong investment criteria such as high tenant demand and desirable accommodation rather than tax loopholes, landlords and investors will provide a much needed service and achieve high returns.