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Rents may not cover buy-to-let mortgages, warns ARLA

24 September 2007
According to the Association of Residential Letting Agents (ARLA), many landlords are not gaining enough money from rental payments to cover buy-to-let mortgages.

The buy-to-let market, which is said to have benefited approximately 400,000 private buyers in recent years, could now be facing a period of struggle.

ARLA has reported that rental returns were five per cent or less for 67 per cent of landlords in August, lower than any buy-to-let mortgage currently available.

Those thinking of investing in a buy-to-let property now need to weigh up potential rental income against the price of mortgage repayments, agents’ fees, tax and insurance.

And, with some predicting flat or lower house prices in 2008, many recent buy-to-let landlords have shown signs of panic. According to the Council of Mortgage Lenders (CML), more than 170,000 new buy-to-let mortgages were taken out in the first half of 2007 and, if high numbers decide to sell these rental properties, the housing market could take a serious hit.

Despite this, many owners of buy-to-let properties have substantially profited from the business, having enjoyed what has often been described as the “property price boom”.

Find out more about buy-to-let mortgages and use our mortgage repayments calculator