Landlords are losing confidence in the property sector, with continued difficulties obtaining funding still an issue. But while buy-to-let may no longer be the hot property it once was, as an income investment for those with enough money to raise a big deposit it looks an attractive option, especially given low savings rates and stock market volatility.
Yields may have settled at around 3% to 5% but, for those for whom liquidity is not an issue, these are still comfortable investments in comparison to other assets with their associated risks.
The mixed picture is revealed in two recent surveys. Lettings specialist Upad highlighted a 9% drop in confidence amongst landlords since April 2012 attributed to various factors such as the availability of rental stock outside London. The Consumer Credit Counselling Service reported a 55% increase in the number of calls they receive from tenants unable to pay their rent, with around 50% citing unemployment as the cause.
We have seen a steady increase in the number of second charge cases in some regions over the last few months where landlords are releasing equity to reinvest where conventional re-financing is not easily accessible. Of course this mixed outlook is exacerbated when we factor in London against the rest of the country. In the capital, even though rents are up to 80% higher than the rest of the UK, the rental market remains hugely buoyant due to supply and demand.
By comparison to other assets buy-to-let retains a lot of appeal. While it is not liquid enough for some, few other investment options offer the steady returns and capital growth that rental property can. In a world where investments that sound too good to be true generally are, buy-to-let offers good value for the long-term.
Robin Johnson is managing director of Kinleigh Folkard & Hayward Chartered Surveyors
