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.