You are here: Home - News -

Property investors must tread carefully

by:
  • 16/07/2002
  • 0
Following numerous conflicting reports on the state of the buy-to-let market, Mortgage Solutions dec...

Following numerous conflicting reports on the state of the buy-to-let market, Mortgage Solutions decided it was time to get a group of experts round the table and get to the bottom of the matter. So this was the subject debated at our fourth Power Hour.

The conclusion ‘ of a group of lenders, consultants, brokers, networks and analysts ‘ was that the buy-to-let market is by no means on the brink of collapse. However, that does not mean there is no need for concern.

Case studies in the press of landlords who watched their property shoot up in value before selling them on with a smile on their face, coupled with lenders making it easier than ever before to get a buy-to-let mortgage, prompted thousands of inexperienced investors to enter the market for the first time.

Now many are beginning to realise it is not as easy as it looks ‘ facing rental voids and selling up. We all know location is vital, but as David Humphreys, director of consultants Buytolet.com explained, this is no longer enough ‘ his company has one flat on its books that is seven doors away from the lift and it won’t sell because people want to be closer to it.

Then there is the issue of up-keep ‘ continual reinvestment is key to ensure the property remains attractive to potential tenants ‘ fitting properties with worn, second-hand furniture is no longer good enough.

Yet despite this, it is still relatively easy for inexperienced investors with only a little bit of cash behind them to end up £1m in debt.

But whose responsibility is it to check borrowers are investing wisely?

Unfortunately there is a real lack of specialist advice in this area.

Mortgage brokers are qualified to give advice on the right loan but they are not able to say whether the property is a good investment or, if it is not a first investment, whether the investor has a balanced portfolio of property. Estate agents and lenders are equally incapable of providing such specialist advice.

The fact is it can only be the investor’s responsibility. For too long individuals have seen buy to let as a ‘get-rich-quick’ scheme ‘ investors have to accept that it is not and that these are business decisions not to be taken lightly.

For those that do their research, buy the right property and learn to walk before they run, buy to let will remain a good investment.

Maybe it will take a few ‘hard luck’ stories to appear in the press to make some investors realise that buy to let is not as easy as they thought.


Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Middle market landlords facing defaults on buy-to-let payments

Increase in second calls for payment suggests cashflow problems for property investors

Close