Buy-To-Let

Take out a mortgage to buy a property and then, while the rent covers the mortgage repayments, the capital value of the property increases year on year.

For many years, that was the way it was, but now there are signs that the years of easy money may be coming to an end.
In 1996, when buy-to-let mortgages were first launched, only 20,000 were taken out. By 2008 this figure will grow to 940,000 and the total amount borrowed to £108bn.

It has been phenomenally successful and one of the best performing investments around.

Many buy-to-let investors have made fortunes as house prices increased and mortgage rates remained low.

Sell-to-rent

One way to make buy-to-let pay in 2008 is by buying below market value, a niche where investors find homeowners who need to sell fast and are therefore willing to accept a big discount.

The theory is that if a property can be purchased for little, then the rent should always cover the mortgage.

If repossession occurs the former owners are offered the chance to be tenants in what was their former home.

With repossessions up by 30% on last year and profits harder to come by in the traditional buy-to-let sector, it is likely that there will be many more investors relying on this method in the near future.

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