Buy-to-let booms again as property prices rise
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The property price bubble shows little sign of bursting. Indeed the latest figures suggest it is reinflating as investors once more look to buy-to-let deals as a better way of using their savings. The Bank of England has admitted that interest rates will remain rock bottom for the foreseeable future, while property investments are yielding returns of over six percent.
In the second quarter of 2013, there were 40,000 new mortgages issued to prospective landlords, taking the sums lent to buy-to-let investors over the £5 billion mark. This is alarming news for analysts who have pointed out that property in the UK is overvalued, and particularly alarming to first-time buyers looking for affordable housing.
In terms of house prices, the crisis of 2008 onwards is beginning to look like a temporary blip. Average prices in England and Wales have been rising at a rate of around £500 a month and are now at an all-time high , with an average of £232,969.
Government legislation has only encouraged the rises, to the consternation of experts who have suggested that the whole UK housing market needs a readjustment ion order for the average worker to be able to afford the first step on the property ladder.
In particular the government's funding for lending scheme has encouraged lenders to loosen the purse-strings. Mortgage rates for buy-to-let loans have come down, some as low as 2.5 percent. For savers witnessing moribund returns on their ISAs and bonds, property once more looks like a lucrative option, even if the social consequences are unhealthy.
Richard Lambert of the National Landlords Association defended buy-to-let investors. "Social housing has contracted and there are few affordable homes so the private rented sector has picked up the slack," he told The Guardian. "If it wasn't doing that how would those properties be kept in circulation?"