Major investors 'pouring money into buy to let accommodation'

Buy to let insurance customers are likely to be investing in the private rented sector due to the promise of strong returns and it seems they are not the only people who are trying to cash in on the booming market.

Law firm Wedlake Bell has reported that banks and insurers are taking increasing interest in the UK's housing stock, pouring billions of pounds into leased homes.

The organisation revealed that in the last financial year, such firms spent as much as £2.2 billion on houses compared with £765 million in the previous 12 months, according to the Telegraph.

This represents a change of heart among institutional investors, as the benefits of renting abodes now outweigh the potential drawbacks to a more significant extent, head of residential property at the organisation Jeremy Raj stated.

"Financial institutions have previously been reluctant to invest in residential property as they felt that the relatively high costs of managing a residential portfolio, made up of so many small individual properties, cut too deeply into returns,” the Financial Times quoted him as explaining.

However, the law firm revealed rental values have been rising for nine months in a row and now average at £720 per month, making buy to let houses an increasingly appealing opportunity for those looking to make some money.

"Institutions are being attracted to residential property because of improving market fundamentals, including high tenant demand, high rents and a supply shortage that shows no immediate signs of abating," Mr Raj said.

Some areas of the private rented sector are more alluring to these investors than others, including student accommodation.

Iqbal Hussain, property consultant at global real estate group Knight Knox International recently recommended landlords buy up houses in lesser known university towns like Bolton, where there are fewer competitors.

Get a cheap landlords insurance quote today from Simple Landlords Insurance.

Posted by Royston Hunter