Buy to Let Market Growth

Research by Paragon Mortgages suggests that growth in the buy-to-let market is having a positive impact on UK housing by, for example, driving up standards in rental stock and helping to create a more flexible private rented sector. We are therefore keen to ensure that buy-to-let investment is protected and encouraged.

With political and media interest in buy-to-let growing, Paragon has begun circulating their periodic research publications – including their monthly Buy-to-Let Index (which tracks indicators and trends in the market) and quarterly Survey of Buy-to-Let Trends (containing survey research on the landlord community) – more widely to help inform the public policy debate and increase understanding of how the market works.

The September 2005 edition of the Buy-to-Let index illustrates the following key points:

• Sustained buying activity since the spring and the higher property prices that go with it reflect a renewed confidence amongst landlords in the private rented sector.
• Although there was a modest easing of average property prices and rents during the month (attributable to a spike in July caused by unusually high value transactions during that month), August was in line with the longer-term upward trend of these indicators.
• Average rental income stood at £10,521 in August 2005, an annual increase of 10.47%. Greater London and Wales both experienced month-on-month increases in rental income in August (of 6.71% and 2.53% respectively).
• The average landlord property value stood at £160,984 in August, up from £152,622 in April 2005 and from £141,765 in August 2004 – an increase of 13.56% over the last twelve months.
• Wales was the highest yielding region in August, with an average yield of 7.37% and property value of £137,425. The West Midlands was the second highest, with a yield of 7.31% and property value of £122,112.

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