Landlords see high returns

Buy-to-let investors are benefiting from high annual total returns because potential buyers are not keen on entering the market.

Paragon Mortgages says that an uncertain housing market has forced many young people to rent instead of buy and this has benefited landlords.

The firm's October Buy-to-Let Index shows that annual total returns on the average buy-to-let property reached levels not seen since summer 2006.

The average figure sits at 14.2 per cent, well above the 10.5 per cent seen in September 2006.

Greater London saw the best returns of 25.1 per cent, followed by East Anglia (24.5 per cent) and the North (20.6 per cent).

"The growth of the buy-to-let market has given… people more options – before it was either live at home or buy a property, even if it meant you were financially stretched, and we saw the consequences of that in the early nineties with mass possessions," said Nigel Terrington from Paragon.

"Now, the private rented sector is offering good quality alternatives to house purchase, enabling people to live in a quality of home they may not necessarily be able to afford to buy.

"Those people who would have been looking to purchase their first home in the current environment have the option of affordable and good quality rented accommodation instead," he added.

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