BUY-TO-LET remains hugely popular with 10,000 people every month becoming amateur landlords under the scheme.
An extra 120,000 investors bought a buy-to-let property last year in search of potential double-digit returns, according to new figures released by estate agents LudlowThompson.
This means that more than 1.61million Britons are now amateur landlords, a rise of eight per cent in 2014.
Chairman Stephen Ludlow says: “The high yields on offer from buy-to-let make it one of the few options for investors who want more from their cash but without the volatility of the stock market.”
Falling inflation means that interest rates are likely to stay low for longer, making mortgage finance affordable.
New figures from MoneyFacts show that taking out a buy-to-let mortgage has never been cheaper, with the average fixed rate now just 3.82 per cent while variable rates average 3.63 per cent.
Sylvia Waycot at MoneyFacts says: “A price war among lenders has produced some amazing rates this month, with the majority of deals at the lowest prices ever recorded.”
One in three people heading for retirement are considering purchasing a buy-to-let property, according to a recent survey by Platinum Property Partners.
Landlords made an average return of 13.3 per cent over the past year, according to recent research from estate agency chain Your Move and it predicts high profits in 2015 as well.
Its calculations suggest the average buy-to-let investor in England and Wales can expect a total annual return of more than 11 per cent over the next year, equivalent to £20,520 per property.
Buy-to-let has been a hugely profitable investment since the first mortgages were launched almost 20 years ago, allowing people to borrow money and use the monthly rental income to service the loan.
However, it also involves a lot of hard work and can be risky if interest rates rise or house prices crash.
Neil Woodhead, the founder of Ready Rentals, a support service for private landlords, says: “You cannot simply sit back and watch your money grow.
“It is important to be realistic and factor in the additional costs of managing a property. Do your sums carefully in advance.”
You also have to allow for ongoing repair bills, vetting tenants and keeping on top of ever-changing legislation and legal requirements.
“Too many will fall foul to naivety and inexperience,” Woodhead adds.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says one danger is that existing homeowners are putting even more of their wealth into the property market.
“If you already own the roof over your head you could end up dangerously exposed to a downturn in the market,” he says.
“With first-time buyers struggling to get on the housing ladder, many people are having to rent for longer, so there is strong demand from tenants.”
He adds: “Do your research carefully, buy a property that will be easy to rent out and close to good transport links and invest for the long-term.”