Birmingham Midshires - General - Research Shows Popularity of Buying Properties to Rent
Date: 04 Jul 2001
Becoming a private landlord is proving popular and most people who take out a buy-to-let mortgage want to purchase more properties, according to a new survey.
Birmingham Midshires, the specialist lender of the Halifax Group, conducted a survey of its buy-to-let mortgage customers and revealed that 79 per cent of respondents said they would consider adding to their property portfolio.
Of these, the majority (64 per cent) said they would ideally like between two and ten properties.
Michael Bolton, head of mortgage marketing at Birmingham Midshires commented:
"Buy-to-let is a long term investment and most people enter this market primarily as a means of earning extra income for themselves in the future.
"Providing it is looked into properly, becoming a private landlord is not as daunting as some people might first imagine - as these survey results have shown. When done properly buy-to-let can be a very accessible investment option."
The survey also revealed that the main reason people to go into the buy-to-let market is to earn an additional income now and for the future.
More than half of respondents (51 per cent) said it was to create additional income for the future/retirement and a further 27 per cent said it was to create an income now and an investment for the future.
A total of ten per cent were more generous - with six per cent choosing buy-to-let as a means of owning additional property for their family/friends to live in and four per cent seeing it as a chance to provide an investment for their children to inherit.
The type of property people decide to buy-to-let all depends on the specific demands of the local area, but generally smaller houses tend to be more popular in most locations.
And in line with this trend, according to the survey results, the most popular purchase for buy-to-let customers is smaller properties. A total of 51 per cent rent out flats/maisonettes, 41 per cent rent out terraced houses and 26 per cent rent out semi-detached houses. Only eight per cent rent out detached houses and four per cent bungalows.
Buy-to-let is becoming increasingly popular for a number of reasons. Rising house prices, improved legal rights for landlords, a wider choice of buy-to-let mortgages and an increased demand for rented properties, have all contributed. Consequently more people are seeing buy-to-let as a viable long term investment option.
As with any investment, however, there is the initial outlay to consider. The first payment required will be for the deposit. Only a 15 per cent deposit is needed with Birmingham Midshires, which is one of the lowest on the market, and all its mortgages are based on the fairer daily interest system so borrowers get the full benefit of the repayments as soon as they are made. Other costs include ongoing maintenance and repairs as well as the usual house-buying expenses, like solicitor's fees, survey and stamp duty.
To cover ongoing costs, the most important calculation required is the mortgage payment versus projected rental income. While some lenders require monthly rental to be at least 150 per cent of the monthly mortgage payment, Birmingham Midshires specifies a minimum 125 per cent.
Buying a property to let can yield healthy financial rewards in the long term. In addition to the extra income from the rental, there is also the capital growth should the property increase in value. And, once the mortgage is paid off, there is the opportunity to either sell the property or continue letting it.
"Buy-to-let continues to be popular with long term investors and Birmingham Midshires offers a flexible range of mortgage products in this area to make the process as easy as possible for those who choose to become private landlords," added Michael Bolton.
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