Despite the prospect of falling UK house prices, there remains some good news for Buy to Let tenants. Average rents are continuing to rise, buoyed by rising demand.
A key factor in the rising demand for rentable properties is the growth in immigration, especially from Eastern Europe. This means that with rising demand, the price of renting has continued to rise. According to Mortgage lender, Paragon Average rents were £11,066. This represents an annual increase of 10.2 per cent.
The rise in demand is not being met by a rise in supply. This is due to the general shortage of houses, but, also the reluctance of buy to let investors to increase investment in a potentially falling property market. Therefore, a drop in UK house prices may not be matched by a fall in renting prices.
Sub Prime Buy to Let
A problem looming on the horizon for many sub prime buy to let investors is the fact that many banks have reduced the range and scope of sub prime mortgages. The definition for a sub prime mortgage is anyone who has a record of mortgage defaulting, resulting in a CCJ (County Court Judgement). Because less sub prime mortgages are available, many buy to let investors will be forced to take out more expensive SVR loans, when their mortgage term expires. This gives buy to let investors another reason to sell.
see: Buy to let landlords fear they may have to sell
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