Buy to let booms 13% in a year

Buy-to-let is booming. That’s what the latest figures from the Bank of England tells us anyway with a 13 per cent year on year growth.

We believe this is fantastic news for current and aspiring landlords as the buy to let sector gets back on its feet.

Figures published this week saw the 13% growth in the last quarter of 2014 compared to the same period in 2013.

The data shows £7.6bn was advanced to landlords in Q4, up from £6.6bn in the same period a year earlier.

Lenders dished out a grand total of £51.3bn in mortgage loans in Q4 last year, down slightly from £51.5bn a year earlier.

The proportion of loans made at 90 per cent LTV and above nearly doubled from 2.42 per cent in Q4 2013 to 4.44 per cent in the last quarter of 2014.

Buy to let

There has never been a better time to be a buy to let landlord with house prices growing, rents increasing and mortgage rates at record low.

There are pressures and possibilities on the horizon as political meddling in personal finances open opportunities.

Firstly, the pensions revolution starting next month will allow anyone aged over 55 to have access to their entire pension pot.

This will give millions access to billions of pounds of hard-earned savings and experts are predicting the cash will be poured directly into the buy to let market.

With a stable asset and steady returns many would-be landlords are already looking to the sector to provide an income into retirement.

Secondly, the shift away from social housing and decline in people owning homes is creating opportunities for those in the private rented sector.

With more immigrants, students and mobile youngsters the British population is renting more than ever and landlords are place to take advantage.

We are already seeing big investments from professional asset managers such as Aviva or Prudential into UK private renting as they sense the opportunities for growing assets and steady returns.

In summary, the people who fund your pensions are paying for partly by investing in buy-to-let so why not let pensioners have a go themselves?

Thirdly, however, is the long-term risks to buy to let. As the private rented sector grows politicians are becoming more interested in the sector

We are delighted to see landlords encouraged with tax relief for the first part of the rental income but at a cost of £5bn to the public purse it is potentially under threat.

There are also plans to regulate landlords through local registers and prevent certain areas building rental properties.

All these plans would restrict the incredible growth we have seen in the sector over the last year and damage a crucial part of the housing market.

For landlords though, these are niggles. The horizon looks positive and the outlook fair for first-time landlords looking to make a fist of it themselves.

We believe it is great news to see the sector rebounding strongly after suffering miserably in the financial crisis.

It presents many opportunities for well-advised mortgage borrowers looking for a choice investment in a growing property market.