Buy-to-let gets a "boost" from rising interest rates

Yesterday's decision by the Bank of England's monetary policy committee to raise the base interest rate to 5.75 per cent provides a "boost" to the buy-to-let sector, it has been suggested.

Keith Astill, managing director at UCB Home Loans, said that high rates, which exacerbate difficulties with property affordability, mean would-be first-time buyers turn to the rental market, where "their overall outgoings are generally lower than those of homeowners".

"Ironically, people are renting for longer because it's more difficult to afford to buy, which is in turn providing a boost to the buy-to-let sector," he said.

He also commented on the reasons why buy-to-let property sales continue to rise, even in the face of high interest rates.

Mr Astill explained that the average investor takes a long-term approach to his portfolio, which means that short-term fluctuations in rates are not a concern.

Recent data released indicated that the buy-to-let market expanded 30-fold in the past decade. It has come to represent ten per cent of the UK residential housing sector, the figures show.

UCB Home Loans is Nationwide's specialist lender.

Investors 'should be cautious with Bulgarian buy-to-let'

UK investors who are looking into purchasing buy-to-let property in Bulgaria should first carefully consider what type of investment they are making, it has been suggested.

Les Calvert, said that British property investors first need to decide if they are seeking short-term or long-term investment, as well as if they are looking for capital growth or an investment rental.

Would-be landlords should ensure that they inspect each development closely, determine where the guaranteed rental income is coming from and secure legal representation in order to set up a limited company, he remarked.

Additionally, Mr Calvert explained that tourist rental possibilities may not be as high as in other countries.

"The ski season is very short in Bulgaria, as is the summer season, so if they are looking purely for rental yield, they need to be very careful in that respect," he said.

Mr Calvert added: "They need to be careful where people have built-in rental schemes guaranteed - for instance, if you buy your property and it has guaranteed six per cent rental for two years."

Bulgaria has a population of 7.8 million and shares borders with Romania, Turkey, Greece, Serbia and Macedonia.

Landlords 'invest after advice from IFAs'

Landlords are increasingly choosing to invest in buy-to-let properties after being advised to do so by their independent financial adviser (IFA).

A study by Mortgage Trust, which is part of the Paragon Group, found that the number of new landlords citing a recommendation by their IFA as the reason they decided to invest rose to 20 per cent in May.

At the beginning of the year, this figure was eight per cent, the data indicates.

John Heron, director of mortgage for Paragon Group, said that this type of investment should be viewed over a longer period of time.

"Over the medium-term, buy-to-let generates good returns, both in terms of monthly rental returns and capital appreciation," he remarked.

"Indeed, landlords typically hold their buy-to-let investments for more than ten years and a significant number of them … are investing in buy-to-let as part of their retirement provision."

He added that an IFA is a good first "port of call" for those who are thinking of investing but do not know where to start.

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