Number of buy to let investors grew by eight per cent in 2014

The number of buy to let landlords totalled 1.63 million at the end of 2014 following an eight per cent increase over the year

New figures released by London-based lettings agent Ludlow Thompson have provided positive news for the buy to let industry.

According to the firm, the number of investors operating within this market was up in 2014 compared to a year previously.

They highlighted a record low rate of interest on bank deposits and government bonds as core reasons behind the sector’s continuing ability to attract new investors but also suggested that a significant rental yield of five to six per cent is an achievable estimate in certain parts of the Capital.

Changes benefit investors

The firm’s chairman Stephen Ludlow said regulatory changes which have taken place within the market recently also contributed to the success as they made it more difficult for first time buyers to secure mortgages which increased tenant demand as a result.

More than just a flash-in-the-pan success, Ludlow Thomas is also confident that the popularity of buy to let will continue to grow in 2015.

The financial benefits of lower stamp duty charges which were announced in the Autumn Statement will influence this as there will be no tax on houses worth £125,000 or less.

All other properties will be assigned tax brackets based on property values as follows:

• £125,000-£250,000: two per cent tax

• £250,000-£925,000: five per cent tax

• £925,000-£1.5 million: ten per cent tax

• £1.5 million and over: 12 per cent tax

Pension changes may affect the market as potential investors will look to use their pension funds to purchase properties and enter the market.

A strong future

Whatever the reason behind their investment, the numbers of landlords operating within the buy to let market is only likely to continue rising.

The net income of this group has already hit £13.1 billion (2012-2013) following an eight per cent rise from a year previously (2011-2012) when £12.1 billion was recorded.

If this is anything to go by, then the recent increase in the number of investors could generate even higher collective incomes to make the market stronger than ever.