A report out today suggests that landlords can enhance their returns by using a Buy-to-Let Mortgage.
A Buy to Let Investor who takes out a mortgage, known as gearing will make extra gains as a result of rising houseprices.
It is predicted that the number of people living in private rented accomodation to rise by over 1 million in the next 5 years as strict new lending rules that come into effect in April 2014.
Take the example of mortgage requiring a 25% deposit. A £4000 increase in value of a £200,000 property bought wholly in cash is only a 2% rise in the investment. However, that £4000 would be an 8% jump if the investment had been only a £50,000 deposit with the rest covered by a mortgage.
The Centre for Economics and Business Research expects property inflation of 6.4% this year and 5.4% in 2015. It predicts the average house price the average house price in 2020 will be £307,374 up from £240,758 this year. Whereas the Estate Agent Savills predicts an average rise of about 25% over the next 5 years, varying from 18% in Northeast England to 32% in the Southeast.