There is good news for landlords as Paragon Mortgages December buy-to-let index has shown that the average rents in the UK increased by 8.5% in the final quarter of 2004, and have risen above £10,000 per year for the first time since the index began.
Average property prices also increased by 3% in the last 3 months, from £148,864 in October to £153,291 in December. The highest overall return for landlords in the buy-to-let market was in Wales, where they received a return of 56.8% on premises they bought only 12 months earlier.
Our view
Property in the longer term will always prove a solid investment but be aware that sector may become volatile as interest rates move. As rates go up less people may be able to afford a home meaning rents rise. Likewise, when the Government's new cheap housing scheme takes shape over the next few years this will impact on buy to let.
Our advice: research your market and location before buying. In addition be aware of capital gains taxes on profits of second homes. See our fact sheet on second properties.