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Could SMEs benefit from the boom in buy-to-let mortgages?

In the UK property sector, making money is something that doesn’t seem too easy at the moment. Despite low interest rates on offer from a number of lenders, the demand from first-time buyers who can actually afford to get on the property ladder is low, partly because house prices have remained sky-high even after the housing boom ended several years ago.

Rent reaps rewards?
While buying properties outright with a mortgage or by paying in full might seem like a pipe dream to most aspiring property investors, the market for buy-to-let mortgages couldn’t be in better health right now. Demand of late has soared, rising by more than a quarter in the past 12 months alone, and it’s easy to see why this is the case.

One of the main reasons why buy-to-let mortgages are proving popular is that the demand for rental properties has gone through the roof. As many people can’t afford to take out a mortgage, they have no choice but to rent until they can afford to pay a deposit, which means that landlords who make their properties available for rent aren’t likely to be short of interested tenants.

Perks of being a landlord
Small businesses looking for an additional income source could do a lot worse than take out a buy-to-let mortgage. As demand for rental properties remains high from house-hunters and businesses alike, renting out a property can help to improve cash-flow. Becoming a landlord is also useful because it comes with fewer responsibilities than other investments.

Landlords are self-employed, and are usually allowed to exert more authority when choosing how much to charge in monthly rent payments, who to rent to and the look of the property. Some believe that should the boom continue, buy-to-let mortgages will remain attractive to small businesses for supplementing income.

A spokesperson from Totally Money said:
“It’s no surprise that buy-to-let is booming. Low interest rates are here to stay for at least a couple more years, meaning mortgage payments will stay low while savers suffer – the average savings yield is an abysmal 1.09%.

“With rental yields soaring upwards of 6% in parts of the country, buy-to-let is starting to look like a smart investment. If you have the capital then the rewards are very attractive – there are few other investments that come with an expectation of inflation-busting income as well as capital appreciation”, they added.

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