BUY-TO-LET is the initiative devised by the Association of
Residential Letting Agents, ARLA, and supported by a panel of
leading mortgage lenders.
It was designed to stimulate the growth of the Private Rented
Sector by encouraging private investors to take the opportunities
given by low, highly competitive, interest rates and the reasonable
certainty of sustained capital growth over the coming years. Whilst
in 2008/9 financing has not been so readily available it
still remains an attractive investmnet with proerty being more
affordable and the possibility that prices will rise again when the
credit market along with the property market moves forward
Historically, buyers of property to let had been surcharged or
forced to borrow at commercial rates and potential rental income
was not taken into account for servicing the
borrowings.
The panel of lenders supporting the Buy-to-Let scheme
brought their interest rates into line with the rates for owner
occupation and took rental income into account for servicing the
loan. This policy switch was encouraged by the knowledge that
professional letting and property management agents were involved
in the selection of suitable properties for the rental market, in
the selection of tenants and in the management of the properties.
This enhances the creditworthiness of Buy-to-Let propositions.
Through some 3,500 ARLA member offices, the lenders have a
countrywide network of experienced lettings agents who comply with
the ARLA Codes of Practice and the ARLA training and qualification
requirements in letting and property management.
ARLA members include the national chains, regional multiples and
specialist independents. Members are covered by the ARLA Client
Money Protection Scheme which is linked to required client
accounting procedures and high levels of professional indemnity
cover.
Through these agents, and through their own branch networks and
their links to independent financial advisers, accountants and
family solicitors, the Buy-to-Let panel of mortgage lenders brought
a new impetus to the Private Rented Sector and an investment
opportunity, as attractive as commercial property or gilts, for
private individuals to add to their investment portfolios and to
consider for their own private pension planning. Many landlords
have built small portfolios where the rental income covers the
borrowing and will leave the invstor with an income in retirement
or a portfolio which can be sold to provide a capital sum
In the current uncertain times this remains true if the correct
research is carried out and with capital values lower the rental
income once again becomes more attractive, with the hope of a
capital growth in the future.