Buy-to-let 'is the new nest egg'

MORE and more people are buying property to let as an alternative to a pension. Rising property values and higher rents have made the move more attractive than some traditional investments, according to UCB Home Loans, Nationwide Building Society's specialist lending arm.

It said the buy-to-let market had grown rapidly over the past four years. At the end of 2002 there were an estimated 275,000 buy-to-let mortgages worth around £ 24.2bn and accounting for 3.5% of residential lending. The rise in house prices has actually contributed to an increased demand for property to rent, as young people save for a deposit to get them on the property ladder.

The report said interest in buying to let had rippled out from London and the South-East and was now strongest in some northern areas, where house prices were increasing more quickly.

But UCB Home Loans chief Charles Reed warned that competition among landlords was increasing, and investors should make sure they were buying 'the right type of property in the right area'.