RICS says the barriers to entering the buy-to-let market, driven by interest rates and levels of rental cover ratios for mortgages, have made investment “an unattractive proposition for vast swathes of the population”.
Today would-be-investors need to lay down a deposit of £65,600, or 30 per cent of a property’s value, for the average UK house in order to get a foothold on the buy-to-let ladder, according to RICS research. This compares with the £10,100, or eight per cent of a property’s value, required in Q1 2002.
RICS senior economist David Stubbs says: “It takes more capital than ever to set up a buy-to-let investment. Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined.
“However, existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones, and this should ensure that demand from the buy-to-let sector does not dry up entirely.”