Buy to let market still strong

The scarcity of properties being put up for sale is acting as a serious brake on the health of the housing market. Would-be-sellers are hanging on as long as they can in the hope that prices will begin to pick up.

The sentiment is understandable but given that demand is now strong they are probably making a mistake. If they dither for too long they could miss the boat.

The demand for buy to let properties is also increasing. Cash is still king. But for buy to let landlords who want a mortgage there are now a number of offers around which are beginning to look attractive.

Cheaper properties – and the sharp reduction in mortgage repayments – has caused a lot of investors to re-think their strategies. Buy-to-let is certainly a more seductive option than it seemed a few months ago. And if a reasonable mortgage can be found the yields are certainly better than in recent months.

The downside, of course, is that mortgage companies usually demand sizeable deposits, the putative landlord has to tie up his or capital for a lengthy period to see a sensible return, and there is also the expense of having to refurbish and maintain older properties.

Alternatively, if would-be landlords want to buy new-build – the cyclone which has hit developers has produced cheap flats in empty blocks. – they come with risks attached.
The price might appear juicy but starter-landlords could find they have invested in a block in which most flats stay empty for years. This creates a moribund feel, which over time becomes one of dereliction, with an inevitable collapse in rents and yields

The pitifully poor rates for savers – many banks are paying almost zero interest – savers are plumping to put their money into bricks and mortar. Some are helping offsprings purchase their first property – stumping up the chunky deposit many mortgage lenders now demand – while others are putting a first toe into the buy to let market.

The old adage that property always comes back remains true. It is a tangible asset in an unstable climate in which so many bankers and politicians who control the levers of the economy have been exposed as flaky and untrustworthy.