Buy-to-let: strong demand from tenants for rental homes

Higher property prices and tax changes may have dented the attractiveness of buy-to-let, but property is still considered a relatively low-risk investment. And with a shortage of homes available to rent, it could be a good time to enter the market.

Of the 4.7 million privately rented dwellings in England, only 168,634 (3.6%) are currently available, according to research by Sequre Property Investment.

At the same time, industry body Propertymark reports that the number of new prospective tenants is the highest on record.

More women opting for buy-to-let

Interestingly, growing numbers of women are becoming landlords, with new figures showing a smaller gender gap for buy-to-let property than for other investments such as stocks and shares.

Female buy-to-let investors now make up 48% of the UK's 2.6 million buy-to-let landlords, according to analysis by estate agency Ludlow Thompson. By comparison, women account for 44% of investors in stocks and shares ISAs.

"The buy-to-let market has built a reputation of delivering long-term, stable returns to investors looking for income and long-term growth," said Stephen Ludlow, chairman of Ludlow Thompson.

"With the gender gap in buy-to-let ownership narrowing, it might not be long until we see a 50:50 gender split amongst buy-to-let investors.

"This is a significant step considering the much wider ownership gap in other asset classes, such as equities and cryptocurrencies."

Mortgage options on the rise

For those looking to invest in residential property in the coming months, the good news is that there are now more mortgage options than at any point since the start of the pandemic, consumer group Which? reports.

Figures from mid-July show that landlords had 2,709 mortgages to choose from, including deals at 80% loan-to-value, and average rates were falling.

However, it's important to get advice and to look at the overall cost of the mortgage rather than focusing solely on the initial rate when comparing deals, as the cheapest available deals all come with substantial upfront costs.

"There could still be some understandable hesitation from prospective landlords, and some existing investors could even be considering downsizing their portfolio, depending on the pandemic's impact," said Eleanor Williams of Moneyfacts.

"As house prices rise, however, demand for rental accommodation is high, and savings rates remain poor. This means investing in property could be enticing.

"It is vital that would-be landlords and those looking to change their mortgage deal seek advice to ensure it's the right time for them and they find the best package for their circumstances."