'High rates mean more renters'

High interest rates could make buy-to-let house purchases less profitable and reduce rental returns for landlords, but the demand for rental property is likely to keep growing, according to EquityPropertyPortfolios.co.uk.

The site explained that with buying now tough for young property-seekers, the difficulties for buy-to-let purchasers could be offset by the influx of new renters onto the market.

Paragon detected a 6.2 per cent increase in profits for landlords at the end of 2007, the site claimed, while also citing indications from Association of Residential Letting Agents that most landlords remain confident about the future.

But EquityPropertyPortfolios.co.uk cautioned that a report from the Royal Institution of Chartered Surveyors (Rics) had shown that not all landlords would benefit.

Rics found that more capital than ever was needed to invest in buy-to-let property, meaning that as the number of rental property-seekers grows, only the wealthier landlords will be able to keep investing.

News posted on 29th January, 2008