In a survey by specialist buy-to-let lender Mortgage Trust, 83 per cent of respondents predict that house prices will rise by 2 per cent or more over the coming year. Returns are forecast to remain stable, with yearly rents currently standing at an average of 5.8 per cent of portfolio value.
Confidence in the housing market and stable interest rates have led to an increasing number of landlords expanding their portfolios. Almost a third of respondents double the number 18 months ago stated that they were currently buying more property. And landlords expect to expand their portfolios by approximately 14 per cent, which equates to one property per landlord.
The majority of buy-to-let landlords view their portfolios as a means to provide for the future and almost four times as many landlords consider capital appreciation, rather than monthly rental yields to be the most important factor driving their investment decisions.
Nicola Severn, marketing manager at Mortgage Trust, said: By emphasizing the importance of capital return on investment, it is clear that buy-to-let landlords are adopting a sensible long-term approach to their portfolios. Although rental yields provide a regular monthly income for landlords, they are often used primarily to fund mortgage payments, service repairs and maintenance, or to acquire capital for further investment.
With favourable borrowing conditions, healthy rental demand and an expectation of steady house price rises among investors, the outlook for the buy-to-let sector is very favourable indeed.
