40% of Landlords Increase Rents

Four in 10 landlords increased their rents in the last year and just 7% have lowered them. The rent report, compiled by research agency BDRC Continental and property consultancy Allsop LLP, interviewed 1,536 landlords in England and Wales in the six months to March 2013.

It found achieving 87% are achieving the asking rent or higher and 23% are buying more properties this yeart. Excluding London, the average monthly rent for a two bedroom flat is highest in the South East, at £695 per month.

Rents are lowest in the North East at £480 per month. The average monthly rents for a two bed flat in London zones 1-2 is £1,515 and £1,060 in Zones 3-6. For a three bed property, the average is £1,815 in zones 1-2 and £1,435 in zones 3-6.

The average rents in London are staggering and point towards a growing demand for big buy-to-let mortgages. The average house price in the capital has just sailed passed the £500,000 mark and with rents rising even more quickly it could be a good bet. Half a million pounds is a huge amount to stake on an investment and it is important landlords get the right deal by talking to a mortgage broker.

Being a landlord

The average buy-to-let deal usually offers loan to values of between 70% and 80% so the investor is well leveraged but the lender feels safe.

There are a handful of deals available at 85% loan to value but landlords will pay more for the privilege of the extra cash. The most significant difference with residential deals is that loans are awarded through the calculation of rental yield rather than affordability.

A broker can talk you through the intricacies of how lenders calculate the rent in a certain area and the basis upon which you are awarded a mortgage. Buy-to-let is a specialist mortgage sector and not to be entered into lightly as it is unregulated and complex and investors can potentially lose lots of money.

A broker can advise you through the process as having undertaken the exercise many times before. He can tailor the loan to give you more monthly cash flow or a lower deposit depending on your preferences. Specific advice about your investment needs is even more crucial for big buy-to-let mortgages as there is more money at stake.

One month without a paying tenant could be devastating so it is important to have a broker on hand to handle the mortgage. If there are any difficulties then they are the person to turn to first before letting problems build up over time. Most lenders also prefer selling their buy-to-let mortgages through brokers as ity gives them piece of mind the borrower knows what he is getting into.

They can be secure that all the risks and options have been fully explained to borrowers by a trained professional. This is why many specialist buy-to-let lenders only sell through brokers and potential landlords are unable to buy direct.

None High Street Lenders

Lenders such as Precise Mortgages, Paragon Mortgages or Kensington will not be familiar on the high street because they have no presence there. These lenders offer specialist deals only for landlords and wil be more flexible than the high stree with a deal that may better suit you.

Only brokers can access them so you will have to speak to a specialist adviser to get the full range of the market. With rents rising so quickly buy-to-let is vert attractive but if you are buying in London or other expensive areas then it is crucial you get the right advice or it could be very costly indeed.