Buy to Let Market
| Published: 1st October 2007 20:37 |
The buy to let market in the UK looks set to continue to enjoy prolific success in spite of recent interest rate rises, as a result of persistently high house prices and unsettled market conditions.
Additionally with rental income rising at the fastest rate ever recorded, there is no sign of any slowdown in investment in rental property for the foreseeable future as interest rates continue to suppress new home buys and consumer mortgage applications.
"National press have been jumping on the house price crash band wagon far too easily" Mr. Dean Woodman-Evans director of The Landlord Association (http://www.LandlordExpert.co.uk - The largest, free nationwide association for all residential landlords).
"The currently higher UK interest rates have put the price of borrowing beyond many at the lower end of the market, with house prices continuing to grow year on year beyond the reach of those looking to get on the first rung of the property ladder.
"As a result, more and more people are turning towards rental property for financial reasons, combined with an upsurge in investment property, seeing growth in the sector remain strong over the last few years. Furthermore, with the popularisation of the buy to let model in the media, it is proving continually stable in terms of growth from investors" said Mr. Woodman-Evans.
"There now appears to be clear evidence that this is happening" he continued. "New figures from property agents Hamptons International show that the value of UK lettings has soared by 40 per cent between August and September this year, with many cases of landlords asking for more than 20 per cent higher rent in renewals".
Kate Whotton, the regional lettings director Hampton's said the research showed that the recent housing trends had "exacerbated" the situation in what was normally a busy month to start with. "The lettings market becomes more robust if the sales market suffers and this is certainly the case at the moment,"
The economy looks bright too. This month's consumer confidence figures from Lloyds TSB, showing the best interest rate expectations for over a year and the greatest optimism about employment prospects in over two years and indicates that the gloomiest views about the economy are not so widely shared.
Describing the current rental market as "incredibly strong at the moment", Hamptons Whotton added that "this was a time of year when people were moving to various cities, particularly as the start of the academic year approached or last year's graduates start new jobs.
"Landlords are taking advantage of these conditions and realising the investment opportunities available to them," she stated.
The latest research of it's members by The Landlord Association adds testiment to the growing evidence.
Mr Woodman-Evans stated that "thus far from being a doom-and-gloom situation, it appears there is a very good reason for the buy-to-let market to view the slowdown in the housing market with optimism. Of course, it may not last, but that doesn't necessarily mean a housing crash - if interest rates are cut the reverse may be true. But for now buy to let landlords should not be panicked into selling-up.
"There are some so called industry "spokesmen" advising landlords to sell-up amid bleak forecasts for the buy to let market. But, with government figures confirming an ever growing shortfall in housing stock and the probability of interest rate cuts by the new year, carefully geared investments are quite literally as safe as houses" he added.
"I have always recommended that landlords and homeowners alike should buy sooner rather than later if affordability allows for that individual to do so. This is because no matter at what point you consider entering the market properties will always be more expensive at some stage in the future no matter how much short-term ‘instability' is to be believed.
"As for a house price crash, well apparently the UK housing market is due for a massive correction in market value. This is according to some limited 'property experts' and financial advisers. Some even suggest it has started already and this has sparked the rumour that many buy-to-let investors are pulling out of the market and selling up.
"As Director of The Landlord Association (www.LandlordExpert.co.uk - The largest, free nationwide association for all residential landlords) and aide to thousands of buy to let investors, I can tell you that this simply isn't true" stated Mr. Woodman-Evans.
"Some 'experts' are predicting that a major slump has began and that with the introduction of HIPS (Home Information Packs) around the corner on all UK properties, they are suggesting that if any landlords and homeowners were thinking of selling, to do it now before the market drops and HIP's and another possible interest rate rise puts the dampeners on the market in a big way.
"Firstly, HIPS are almost a fact of life. People will not simply now remain in their unwanted homes for life, just because of a £500 HIP" he continued. "Confidence will return once the dust settles and the panic is replaced with suitable calm and a positive outlook.
"What we are clearly seeing at the present time is a temporary settling of the market. Buyers and sellers both waiting for a torrent of interest rate rises to come to an end and the credit crunch to show its scars. Interest rates could fall as low as 4.5% by the end of 2008 and as long as our economy remains robust, the property market and landlords should benefit from long term gains and prolonged stability.
What do you think?
You will need to sign in to post a comment to this article. if you do not have an AboutMyArea account, you can join now for free.
