Last year, we started to see the effects of too much borrowing and declining in house prices in USA. One year later, economies throughout the world started to collapse, financial institutions going into administration, Governments in the verge of bankruptcy, mortgage lending at very low levels, UK house prices coming down and a global recession.
It’s all bad news, no! The buy to let market is stronger than ever with the demand for rental properties being higher than ever, due to first time buyers not moving into the ladder and immigration from east European countries.
Within a dreadful situation, we can always find good opportunities. 2009 New Year, New Hopes! It will be into 2009 that we shall see some improvement on the lending, specially buy to let mortgages.
It’s been predicted, the houses prices will still coming down but at much lower pace and probably in 2010 they may start coming up.
For the landlords it’s a time to consolidate and review their portfolio with great opportunities to invest if you are in strong position.
Buy to let Market
Between 2004 and 2006 the buy to let boomed, due to easily accessible buy to let mortgages and property prices growth. Now the buy to let mortgage diminish, tougher lenders’ criteria, specially rental cover, and house prices are coming down.
Buy-to-let is no longer sizzling and many investors that started being a landlord in recent years are struggling as mortgage rates rise. Many could not change mortgages due to low or negative equity, so when the initial rate deal came to an end and they started to pay the Standard Variable rate of the Lender, the rent was not enough to cover the mortgage payments.
Within the most affected are those investors who bought properties at a suppose discount to sale straight away, looking for short term investment but when properties prices started to come down and the houses taking longer to sale, they run to serious problems.
The golden rule of buy to let investment is to look as a long-term investment, taking seriously. If the landlords invest wisely, look at long term, do the homework and stick to the tried and tested method of investing for rental returns rather than capital growth, they will be successful. Otherwise, the investor will probably run into serious problems.
Buy to let investment does not guaranteed success as any other investment but doing it well and it can be an excellent piggy bank for retirement.
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