Investments Explained: Why buy-to-let properties are a big deal

Investments Explained: gives tips and tricks about the investment opportunities available on the site.

This week, buy-to-let property goes under the investment scope. But why should you care about letting property? And are returns really as big as they say? explains why the sector is still booming around the world.

UK housing shortage

At the moment in the UK, housing is short in supply – and the houses that are there are too expensive, even with government measures in place to boost lending. But whether the economy is in dire straits or not, there will always be people who can't afford a place to live, especially with the country's wider shift towards renting as a lifestyle choice over traditional homeownership.

As a result, the number of landlords is on the up, with buy-to-let lending increasing and portfolios expanding. Some are arguing this increase in both professional landlords and virgin landlords may cause rental increases to slow down, but with rates already higher than in previous years, the concern is minor.

Student surge

For those not keen on buy-to-let investment in residential property, student property is another guaranteed rental opportunity. University applications from outside of the UK are on the up, cancelling out a decline in domestic interest, leaving occupancy rates at record highs and institutions running out of official accommodation. Private landlords have been hovering up the remaining returns for years, with yields climbing into double figures in regional cities such as Leeds and Newcastle. With student property investment hitting £2.7 billion in 2012, and the student property sector demonstrably resistant to recession, the cycle is only set to continue.

Lifestyle appeal

Buy-to-let doesn't just happen in the UK, of course: holiday homes in other countries are prime rental targets when located in tourist hotspots. Low prices across Europe and further afield ensure that yields are as strong as the desire to go sunbathing during the off-season months.

Local demand

Where do you go if you can't find a holiday let or student property investment? Right now, North Dakota. The US state's oil boom has seen workers swarm from across the country to enjoy the economic benefits of employment. That rise in population has sparked a huge housing shortage, pushing buy-to-let yields up for those who can afford to invest in the area. It may not always be oil, but the inherent nature of the housing market, regardless of the country, means that demand for rental property can always be found somewhere.

From local economic factors to wider social trends or market movements, buy-to-let investments benefit from always being needed. Yields are guaranteed – as long as you're in the right area at the right time.

For more information on buy-to-let properties, click here to view's listings.