A growing number of landlords are choosing to invest in buy-to-let property after receiving advice from their IFA, according to Mortgage Trust.
Research commissioned by Mortgage Trust reveals the number of new landlords who state that they made a buy-to-let investment based on the recommendation of a financial adviser has risen from 8% at the beginning of the year, to 20% in May.
The research shows that brokers have a good understanding of the long-term growth prospects of the private rented sector, due to the chronic shortage of housing in Britain.
John Heron, director of mortgage for Paragon Group, thinks the buy-to-let sector represents a good investment in the long-term, despite fears that house prices might fall in the short term.
Heron says: “Over the medium term, buy-to-let generates good returns, both in terms of monthly rental returns and capital appreciation. Indeed, landlords typically hold their buy-to-let investments for more than ten years, and a significant number of them they are investing in buy-to-let as part of their retirement provision.”
The private rental sector is likely to see a period of sustained growth. As the number of students, immigrants and single person households increase, there will be more demand for rental property and rental yields should increase.
Current average net return from rent is around 4.4% and returns are even higher when taking into account the long-term capital gains of an investment property.
Heron also says that financial advisers are the best place for potential buy-to-let investors to explore the many options available to them.
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