» Read the complete article

Recent statistics from LSL Property found that rent increased by 8.2% over the middle of this year – but what are you doing with your extra rental income?

One of the biggest problems in the UK property market is supply and demand – there are very few houses on the market as less and less people can get another mortgage, or simply cannot afford to move. There is also a massive lack of first-time buyer mortgages available, so there are few new entrants to the market and those who want to move up the ladder can't.

All this points to more people renting – everyone needs a roof over their heads, so if they can't buy a house, they will have to rent a house. And more demand for renting means landlords can afford to up their rents. If you are one of these canny landlords where is your extra rent going?

A mortgage adviser will tell you that there are a range of options for landlords when it comes to investing their profits. You could save them into a savings account, dripping any extra profits into a fund each month for either capital gain or an added monthly income. This is fine, and an adviser will point you towards many savings and investing options. You may also be using the extra money to invest into a private pension. Again, a good adviser will help you with all your pension needs.

Of course, you could use the money to improve your current bricks and mortar investment – overpaying on your mortgage could mean you reduce the term of your deal and improve your credit score, thus improving your chances of getting a better rate in the future. You may even invest your money more directly with improvements and refurbishment to your property – with winter coming round again there is always things you can do to make your property more livable.

Or, if you are making big profits it may even be time to look to increase your buy-to-let portfolio – property is cheap so bargains can be had if you have the money to invest.

At the end of the day, before you make any decision, talk to a buy-to-let adviser. They will be able to help you choose a place for your money that works with your circumstance and your future plans.

SOURCE: LSL Property, 28/09/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog