Buy to lose in 2007
Due to ever changing market conditions Buy to let investments have suffered recently, however portfolio managers are confident the blip is only temporary.
According to independent research conducted by a major property website, BTL returns are dropping rapidly due to strong house price growth over recent years. Another primary factor, affecting a large percentage of landlords is the inability to raise rental prices in order to combat the drop. Rental rates are not as positively influenced by market conditions relative to the property value. Of course location can be an influencing factor to rental cost, but on the whole they tend to remain static.
As far as a geographic split is concerned, Scotland has witnessed the largest drop with rental yields dropping to 5.8% from a high 3 months earlier of 6.7%. Throughout England the decline has been slightly more forgiving, with yield drops averaging between 0.1-0.3 of a percent nationally.
In spite of this however, almost 90% of BTL investors still intend to expand their portfolios throughout 2007. Of those surveyed 56 per cent plan to purchase at least one additional property, 29 percent plan to add four and 5 percent may increase their portfolios by 10.
However the luckier of BTL investors, owning properties in prestigious parts of the country are able to raise rental prices enough to compensate for any market fluctuations, thus avoiding any future slumps.
