'Continuing demand' for buy-to-let properties

An influx of economic migrants from eastern Europe has helped drive up demand for rental accommodation, according to new research.

The National Association of Estate Agents (NAEA) cited immigration as one of the major drivers of the buy-to-let sector, alongside other factors such as high demand among those who cannot afford to buy their own house.

Figures from the organisation showed that during the first quarter of the year, rents increased by an average of 1.77 per cent.

This is greater than during the same period last year, in which the cost of rents rose by 0.2 per cent.

The NAEA attributed this to recent hikes in the cost of borrowing, as landlords have had to increase their rents to cover their additional outgoings.

Jan Bartlett, lettings expert at the NAEA, commented: "The increase in rents is a reflection of interest rate rises, but it has not affected the market.

"Properties are being let at their full asking price, unlike 18 months ago when we often had to negotiate rents down."

Recently, Assetz stated that the average price of property has increased by more than £20,000 in the last year, with a typical home now costing £208, 174.

Residential property 'obvious choice' for investors

Residential property has become "an obvious investment choice" for those looking to save money, it has been claimed.

There is now a general perception that residential property is attractive to a wide range of investors, according to Matthew Benson and Tony Perriam from Scottish property agency Rettie & Co.

Director of new land and homes, Mr Benson and director of residential sales, Mr Perriam, stated that unlike equities, bonds or pension plans, property is relatively easily understood by the public, as they have direct experience of it.

The pair also revealed that yields from rental incomes were "not unattractive" compared with the yields offered on most equities and many bonds.

When combined with the prospect of capital growth and the ability to borrow a large percentage of the purchase price, one can see why it has become so popular, they explained.

With recent figures from Lloyds TSB showing a "surge" in house prices in areas of Scotland - with Aberdeen experiencing a rise of 25 per cent in the last year and Edinburgh of 12 per cent - they said that Scotland is one place that is popular with investors.

They commented: "As people seek to invest in property more widely, and seek 'value' outside their own immediate living area, attention has focused on those areas where property is perceived to be relatively cheap compared with comparable property elsewhere."

Spring surge for Scottish house prices

Scotland has experienced a surge in house prices during the spring period, the latest figures show.

Data from Lloyds TSB Scotland reveals that in the three months to the end of April, the price of the average home in Scotland increased by 6.8 per cent to an average of £154,344.

This means that Scottish house prices are 11.9 per cent higher than they were at the same time last year, good news for buy-to-let landlords with property in the country.

Aberdeen experienced the largest annual rise of 25 per cent, while the north of Scotland excluding Aberdeen, saw rises of 15 per cent, suggesting that Aberdeen's strong growth is extending to surrounding areas.

The firm attributes the spike in prices to a rise in mortgage transactions in the spring, the low number of properties on the market and the desire to take advantage of low fixed-rate mortgages in a climate of rising interest rates.

Professor Donald MacRae, chief economist, Lloyds TSB Scotland, said: "Average prices are some three quarters of the UK level and continue to be propelled by a combination of favourable economic background and demand for houses exceeding the supply."

Recent government figures put annual house price growth in Scotland at 14.8 per cent in March, higher than England's 9.8 per cent and Wales' 9.7 per cent, although lower than Northern Ireland's 50.1 per cent.

Landlord Mortgages “Our quarterly rental yield release has regularly shown that Scotland has outperformed the rest of the UK, and whilst the rental yields in Scotland have dropped in recent months we are expecting them to outperform the rest of the UK for the foreseeable future.”

LettingAgent.com “We do have high demand for rental property in Scotland so Landlord Mortgages figures do not surprise. A genuine lack of properties available for let exists.”

Property asking price rises 13.1%

The average asking price of a property in the UK was 13.1 per cent higher during May than at the same time the year before, new research shows.

According to Rightmove, the typical asking price increased by 0.4 per cent during the month to an average of £237,361, although this was the lowest monthly rise seen so far this year.

The report also showed a rise in the number of properties coming onto the market compared with last year, something that the firm attributes to sellers trying to avoid the cost of Home information packs (Hips), which were set to be introduced next month.

Miles Shipside of Rightmove commented: "You have the potential of Hips artificially increasing the supply of property and, within the same month, a six-year high in interest rates potentially depressing the number of buyers."

He said that the large amount of properties on the market coupled with increased interest rates may mean sellers have to accept a lower price for their home than the few hundred pounds they saved by avoiding the cost of Hips - which could be good news for buy-to-let investors seeking a bargain.

Research from the Association of Residential Letting Agents found that most buy-to-let investors are taking a long-term view of the market and are hoping to keep their homes for an average of almost 17 years.

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