UK buy-to-let market continues to soar

A whopping 74% of members of the UK's Association of Residential Lettings Agents (ARLA) say there are now more prospective tenants than homes available on the rental market, pushing yields up whilst purchase prices remain stagnant in most metropolitan areas outside London.

Figures released by ARLA last week found the rental home shortage in the UK had rapidly increased compared to 2009, when only 10% of agents had reported a demand-supply deficiency for rental properties. Persistently tight lending conditions amongst the major banks have led more and more would-be home buyers into the rental market, and the trend shows no sign of abating – even since last quarter's ARLA report, the amount of agents reporting an increase in rental prices for the properties on their books has increased by 6%.

"Many people are turning to rental homes as a more flexible option than buying", said Ian Potter, ARLA operations manager. "Our research higlights that the dearth of properties is real in the private rented sector and is showing no signs of improvement."

With average annual yields as high as 6.5% and sure to increase as the rise in tenants continues to push rents up, the UK buy-to-let market has never been such an attractive product, especially due to the range of specialist mortgages available for investors, says Ben Thompson, managing director of Legal & General Mortgage Club. "Historically the rental sector was largely ignored by many mortgage and financial advisers. Today, many typical tenants may well be in full-time employment, in their thirties and have started a family. There is also growing evidence to suggest that the next generation are showing a greater propensity to rent than to buy." 

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