Why now is the ideal time to invest in buy-to-let property
September 29, 2016 |
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There are issues that are much bigger than the property sales and lettings industry that are currently making investing in buy-to-let a very shrewd move. The conditions are there to find a property at a good price, borrow the money on favourable terms and secure a return on your investment.
Brexit The referendum vote in favour of leaving the European Union created a fair amount of uncertainty in the property market. Reports of buyers pulling out of deals and asking for last-minute price reductions have been fairly common. This is disheartening for sellers but has created a market where there are good deals to be had on buy-to-let property. Post-Brexit uncertainty has meant that many sellers are prepared to accept less for their property than the pre-referendum price; making it possible for buy-to-let investors to find a bargain.
The need for rental Rental demand is high and the forecasts are that more and more people will need rental property in the future. Unfortunately, many of the “Generation Rent” have been priced out of the market for buying their own home. This means a constant demand for rental property – a demand that buy-to-let investors can help meet; ensuring their investment is a worthwhile one. What is often overlooked is that many thousands of people rent because they do not want to buy. Renting gives them the flexibility to live where they want when they want, with none of the stress or delays that can be associated with buying and selling a home. This growing group of “renters by choice” are another ready market for the buy-to-let investor.
Interest rates Interest rates are at a record low. Some commentators are suggesting that they could drop even lower. Putting this simply, it means that borrowing money for an investment property is now costing less than ever. When you consider this is also a time when, as we have mentioned, there some bargains to be had, it means that the conditions for buying a rental property as an investment are arguably more favourable than at any other time. Interest rates may not remain low, but while they are they can be a vital help to the wannabe landlord.
Housing shortage We are in the midst of a genuine housing shortage in Britain. There is a real lack of houses being built for either sale or rent. This increased demand on available properties means that there is unlikely to be little difficulty when it comes to finding tenants. Britain is reportedly building just under 140,000 properties a year. Estimates say that we need to build 110,000 more than this each year just to stand still. Faced with such a stark shortage, any buy-to-let property that is well maintained and managed is certain to yield a return on the investment as it faces little prospect of remaining unoccupied.
Stability We mentioned post-Brexit uncertainty earlier. But for years before the EU referendum, property was already being seen as a safe bet by those planning for their retirement. Rising house prices and increased demand for accommodation have made buy-to-let investment a smart choice in recent years. When you consider the other factors that I have outlined in this article, buy-to-let is an increasingly logical and attractive proposition; offering greater benefits and more security than at any time previously. In an era when pension problems are in the news regularly, buy-to-let seems more prudent than ever.
It is worth emphasising that none of the conditions I mention here will remain unchanged. The issues that affect buy to let will vary over time. But there is little doubt that, at present, the circumstances surrounding buy-to-let investment are incredibly favourable.