January 2012 – Buy-to-let still thriving!
The continuing recession and the squeeze on mortgage lending are resulting in something of a bonanza for cash-rich landlord investors able to secure low interest mortgages with a good deposit. They can pick-up properties at bargain basement prices, whilst being virtually guaranteed a solid income stream, and with rentals in high demand landlords continue to be the main growth source of housing provision in the UK.
The Private Rented Sector (PRS) has grown steadily from a low point of 6 to7% of residential housing stock by value in the 90s to around 19% today, and is predicted by some pundits to be well over 20% by 2020.
Pilloried by some as contributing to the present housing market troubles, the facts are landlords have "come up with the housing goods" and have been emboldened by a secure income, and the prospect of long-term capital appreciation as a bonus, in a period when alternative cash investment yields are extremely low.
Contributing to the growth of the sector has been a large cohort of "accidental" or "reluctant" landlords, unable to sell their homes, some of whom have come to realise the benefits of being a landlord investor and going on to build up a buy-to-let portfolio.
The downside risk is that during a recession that guaranteed income can come to an abrupt end if tenants either can't or won't pay the rent. Good landlord self-management or using a good professional agent is crucial, and this is where many newbies fall down: anyone can let out a property but maintaining that crucial cash-flow and staying on the right side of the law takes experience and professionalism as a landlord or agent.
High demand, low supply and the inevitable rent increases are resulting in louder and louder cries from some quarters for government to control rents and increase security of tenure. There is a real danger here, according to industry experts, of going back to the Rent Act era troubles. These measures would inevitably drive many landlords out of the market, many would run their properties down by neglecting repairs as returns become uneconomic and the end result would be even more housing shortages.
More Stories...
