Why now is a good time to invest in buy-to-let
The limited number of homes to rent in London and across the UK is creating fierce competition among tenants. The scarcity of available rental properties is also exacerbating a rise in rents, with the Royal Institution of Chartered Surveyors (RICS) predicting the average annual increase will reach 4% this year, as reported by the BBC.
The rising cost of rent coupled with a shortage of homes available for surplus tenants provides excellent opportunities for buy-to-let investors and a robust environment in which to enter the buy-to-let market.
RICS Members Report Growth In Demand
The latest monthly survey conducted by RICS revealed that number of its members reporting growth in demand among tenants during March was at its highest level for five months. The survey also noted that the rental sector was currently ‘constrained’ due to the limited number of rental properties available, which is one of the primary causes behind rents becoming more expensive.
RICS also confirmed that the situation was not just in London or in certain parts of the country, but consistently across the entire UK. A report on the RICS survey stated: “Strong demand is being seen pretty much across the country. At the same time, the landlord instructions metric remains mired in negative territory, returning a net balance of -21% in March.
“In keeping with this demand/supply imbalance, respondents continue to anticipate rents being squeezed higher, with the net balance for near-term rent expectations rising to +59% from +45%. This is back towards the highs seen in the early part of last year. For the year ahead, contributors are pencilling in roughly 4% growth in rental prices at the national level.
“Moreover, all parts of the UK are expected to see an increase in rents during the coming twelve months.”
Rents to Surpass Mortgage Rate Rises?
The Chief Economist at RICS, Simon Rubinsohn, described the consistency of the message from contributors to the survey about the shortfall of properties to rent and the impact this is having on rent levels as ‘striking’. Rubinsohn said: “Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognise the shift in market dynamics.”
Rubinsohn added that the medium-term outlook is looking more settled thanks to the perception that the interest rate cycle is nearing its peak. Having raised the interest rate from 4% to 4.25% in March, the Bank of England is set to announce its next Bank Rate decision in May.
A Boost for Buy-to-Let Investments
As the housing market continues to settle from a particularly volatile few months, the high rents and fierce competition between tenants for the limited number of available properties is a great opportunity for buy-to-let investors. A reliable supply of tenants minimises the risk of void periods, while also allowing landlords to let their properties to ideal tenants, such as young professionals or families. The high rent prices mean the return on the investment will occur at a faster pace too.
There are many properties for sale via remote auction, which speeds up the process so investors can starting renting out new properties sooner than they would via traditional selling methods.
Landlords looking to expand their portfolios as well as those seeking their first buy-to-let investment can also take advantage of modern remote auctions. The timed auctions take place online and allow bidders to purchase properties from the comfort of their own homes.
The current property lots for upcoming auctions can be viewed on the Auction House London website, where there are plenty of houses and flats that are practically ready to be let out. The nature of auctions also means such properties can often be purchased at good prices, with a guide price for each lot provided to give each bidder an idea as to where the bidding will start.
To bid for a property via a remote auction, you must first register with the auction house prior to the auction starting. Registering will provide you with access to the legal packs and let you attend viewings of the properties. Once the auction begins, follow it online and simply place your bid via the on-screen prompts. You will then be informed if a higher bid has come in from another party, or if indeed your bid has been successful.
The sale then goes through much faster than a traditional sales process, ensuring your new buy-to-let investment benefits from current rental market conditions.
If you want to invest in buy-to-let property, then it is easier than ever with Auction House London’s remote auctions. The process is simple for both buyers and sellers, so call Auction House London today on 020 7625 9007 or email info@auctionhouselondon.co.uk for more information.