Rent arrears are decreasing making buy to let as attractive as ever!

Landlords offered a multitude of BTL mortgages as annual returns reach 10%. Rental arrears are falling and landlords are getting an average of almost 10 per cent in annual yields, making the buy...

Landlords offered a multitude of BTL mortgages as annual returns reach 10%. Rental arrears are falling and landlords are getting an average of almost 10 per cent in annual yields, making the buy-to-let sector an attractive proposition according to The Online Letting Agents.

There is little sign of the buy-to-let rush abating with 45 per cent more mortgages on offer now compared with a year ago. At the same time, the latest buy-to-let index from property services group LSL, showed total annual returns from rent and capital gains on an average landlord property rose to 9.7 per cent in the year to February. This is up from 9 per cent in January and from just 5.4 per cent in February last year.

Eleanor Carroll, Director of The Online Letting Agents suggests that the key to a successful buy-to-let can be as simple as a decent mortgage rate and a carefully selected property location. Buying somewhere which will appeal to your target market and is in an area that has a ready supply of that type of tenant will help limit any voids. "It's important to know and understand your tenant market. For example, is there a good transport network for those looking to commute, or good leisure facilities for families who want to settle.

Many landlords like the idea of fixing the mortgage rate, for much the same reason as residential mortgage borrowers. Rising rates will eat into a landlord's margins and rental income is not guaranteed to follow suit, so fixing rates can at least provide some certainty on outgoings.

Buy-to-let mortgage rates have remained stable in recent months despite the residential rates rising, following the withdrawal of the Funding for Lending scheme and the possibility of increased interest rates. Paragon predicts returns in the sector will grow at 11.3 per cent per year for the next decade for mortgaged investors, and 6.3 per cent for those not using mortgages.