Member Article

Buy to Let is dead, long live Buy to Let

A leading property expert has dismissed claims that now is the “worst possible time to Buy to Let” - commenting “reports of the death of buy to let have been greatly overstated”.

A combination of rising housing prices and predictions of rising interest rates have led some commentators to foresee “dark clouds on the horizon” for Buy to Let investors with rental income falling short of mortgage costs.

Figures released this week by the Royal Institute of Chartered Surveyors showed house prices rising in every area of Britain in March and predicted prices nationally to rise by 5.9% a year over the next five years, double the 3.1% forecast last year.

Ajay Jagota of North East based sales and lettings agency KIS however believes that sweeping reforms of the pension system announced in last month’s budget – which abolish the need to buy annuities and allow savers free rein to invest or spend pensions as they wish – mean these concerns could be exaggerated.

KIS manage properties for over 700 landlords from branches in Sunderland, South Shields, North Shields and Welwyn Garden City and were recently named Letting Agent of the Year at the national Landlord and Letting Awards.

Ajay said: “The improving housing market undoubtedly means conditions are better for those looking to leave the life of a landlord behind, particularly the so-called accidental landlords who only ever rented out a property they couldn’t sell. This doesn’t mean that now is not a good time to enter the market.

“We may be seeing a changing of the guard, as accidental landlords are replaced with a new breed of investor looking to take advantage of the sweeping changes to pensions announced in the Budget. These are an entirely different sort of investor with an entirely different set of circumstances.

“Realistically, interest rates are in all likelihood about to go through a sustained period of growth– but from a baseline of almost nothing to a still historically low rate, which should still be attractive to investors.

“From an investment perspective most of the recent critical Buy to Let commentary has been based on predicted rental yields. Before the crash, no-one gave this a second thought - if you invested in property you did so on the basis of future capital appreciation. If investors adopt a more traditional and longer term outlook like this, a continued demand for homes should ensure property remains a wise investment.

“Reports of the death of Buy to Let have been greatly overstated. Or to put it another way, Buy to Let is dead, long live Buy to Let.”

This was posted in Bdaily's Members' News section by Ajay Jagota .