Confidence in the UK buy to let market is robust, with three quarters of investors stating that they intend to buy additional investment properties over the coming year, as low bank saving rates and poor returns on the stock market limit income.
Only 5% felt that now is not a good time to invest in residential property, the main reasons being the belief that prices have further to fall, difficulties in securing mortgage finance and, thirdly, concerns over the financial security of tenants.
Indeed, according to the annual Assetz Buy to Let Investor Survey, investors are taking a long term view, with 65% stating that rental income for retirement is their main motivation, followed by 27% saying it is long term capital growth. Just 8% cited short term capital growth as their reason for investing.
A large proportion are buying either outright with cash or with a very small mortgage, meaning they are not facing the usual hurdle of securing finance, faced by home buyers. Over half, 55%, stated they will be using a low loan to value mortgage or buying outright, with 23% refinancing their home or an existing buy to let and 22% using a high LTV loan.
Most of those surveyed, some 68%, said they are currently achieving gross rental yields of more than 6%, with almost a fifth achieving 9% yields or higher.