It’s clear that despite recent interest rate rises and global money concerns, the buy-to-let property market is still booming.
The Royal Institution of Chartered Surveyors (RICS) said that buy-to-let investors, lured by strong rises in rents, are continuing to pile into the property market.
Demand for rented property continues to increase as high house prices means potential home buyers are staying in rented accommodation, said RICS. Because of this, rents are now rising at their fastest ever rate.
The demand is also being fuelled by predictions that the housing market may slow down in 2008, which encourages potential buyers to hold off until then.
RICS spokesperson Jeremy Leaf said: "Current economic uncertainty has created an ideal platform for buy-to-let investors to cash in on rising rental levels."
"Deteriorating accessibility, tight supply and a slowing housing market has kept would-be home buyers in the rental sector, with many adopting a wait and see approach," he added.
Industry experts have blamed rising house prices and rising rents on lack of new homes being built and the continuing rapid growth of the UK's population, largely due to immigration.
Meanwhile, figures from the Association of Residential Letting Agents (ARLA) said tenant demand now outstripped supply in all areas of the market, while the level of rents also rose in all areas to an all-time high, continuing a trend which started at the beginning of this year. The ARLA said that more than half of landlords had reported an increase in rents during the three months to the end of August, also a new high.
"Rising rents are offering some compensation for landlords that are experiencing higher borrowing costs although buy-to-let investment will struggle for funding in 2008 as lenders become more discriminating, especially for 'sub-prime' properties," said RICS.
The average weekly rent for a flat in a desirable central London area is now £525 a week, with £215 a week being charged in the South East and £150 in the rest of the country.
RICS noted that the increase in the sales of rented property in London and the South East, where rising interest rates have pushed mortgage costs well above rental income, have encouraged some landlords to sell up.
Meanwhile, buy-to-let mortgages have surged in the last 3 years as investors make the most from the rent rises. The number of buy-to-let mortgages in existence has nearly doubled to 939,000; they now make up close to 10% of all outstanding mortgages.
The mortgage lending figures for July show that while mortgages for house purchases and remortgages fell, other types of mortgage rose to record levels.
Lending in this category, which is primarily made up of buy-to-let mortgages and further advances, added up to £7.8 billion, accounting for 23% of total lending during the month; the highest ever proportion.
A spokesman for the Council of Mortgage Lenders (CML) said it was not possible to say how much of this was down to buy to let loans, but that the organisation's most recent half-yearly figures had show the sector was strong.
The RICS said that new landlord instructions (an indicator of buy-to-let activity) has picked up sharply this year, with 20% more surveyors reporting a rise in landlord instructions, up from 8% in the previous quarter. This is the first time in 15 months that the figure has moved above the long run average of 16%.
In addition, 29% more surveyors reported a rise than a fall in tenant lettings, up from 15% in the last quarter.
It seems that al the evidence does reinforce the view that the buy-to-let market is not just buoyant but booming.