Property Investing in the UK: Staying for the Long Term
Parmdeep Vadesha
September 09, 2008
Of late, property investing in the UK has been beset with news of impending doom and gloom. However, all the reports about property prices going downhill and the credit crunch continually biting investors harder everyday have not dashed the hopes of many buy to let property investors. Instead of bailing out, they plan to take advantage of the many cheap properties out there and increase their portfolios.
A recent survey has revealed that regardless of the constant stories of trouble brewing in the property market, many buy to let landlords are increasingly becoming more determined to maintain their residential investment property portfolios. In addition, almost half of them plan to increase their property portfolios.
The results of the ARLA Quarterly Survey of Landlords and the ARLA Review and Index Review prove that buy to let landlords are indeed far-sighted and prudent investors who are in the market for the long term. These investors are fully aware of the realities of the investment market they have chosen to put their money into.
It´s a well-known fact that property held for the medium to long-term can make firm additions to an overall investment portfolio and that property is often the main asset in terms of value. This is the reason for the continual increase in the number of people investing in property. Buy to let, in particular, has soared in recent years, with the value of mortgages taken out to purchase homes to rent out increasing by £82 billion in less than a decade.
A lot of investors who have taken the buy to let plunge have found the investment appealing because of the extraordinary returns produced by rental income and capital appreciation. The last ten years have witnessed average weekly rents soaring by 37% – or 1.3 times the inflation rate – with buy to let constantly outperforming most other types of investment over the last few years.
But with interest rate hikes posing certain risks for investors, there have been concerns about the strength of the buy to let market industry going forward. That´s why it´s crucial for those who are thinking about expanding their portfolios or entering the buy to let market for the first time to make sure that they are buying in the right place at the right price from distressed sellers.
Industry professionals say that landlords have traditionally tried to stay as close to their rental property as possible since they find it much easier to manage them this way. Two factors that have helped to define their success in the field are local knowledge and the capability to become a ´hands on´ landlord. But recent surveys have revealed that high property prices in other places have compelled them to find buy to let properties in more distant locations. Recent research from buy to let specialist Landlord Mortgages has shown that investors have started expanded their portfolios in places such as the Midlands and Yorkshire.
Experts say that one factor to consider when choosing where to invest is if you are more interested in the rental income as a source of overall profit or if you are more attracted to capital appreciation. Several landlords prefer a certain degree of rental income to provide funding for their investment. Others are more interested in growth in capital.
No matter what condition the property market is in, astute investors know that staying in the market for the long term will always prove to be a lucrative strategy. When you look at the potential profits from both the rental income and capital appreciation, you´ll see why property investors know better than to flee in times when the market is stabilising.
A recent survey has revealed that regardless of the constant stories of trouble brewing in the property market, many buy to let landlords are increasingly becoming more determined to maintain their residential investment property portfolios. In addition, almost half of them plan to increase their property portfolios.
The results of the ARLA Quarterly Survey of Landlords and the ARLA Review and Index Review prove that buy to let landlords are indeed far-sighted and prudent investors who are in the market for the long term. These investors are fully aware of the realities of the investment market they have chosen to put their money into.
It´s a well-known fact that property held for the medium to long-term can make firm additions to an overall investment portfolio and that property is often the main asset in terms of value. This is the reason for the continual increase in the number of people investing in property. Buy to let, in particular, has soared in recent years, with the value of mortgages taken out to purchase homes to rent out increasing by £82 billion in less than a decade.
A lot of investors who have taken the buy to let plunge have found the investment appealing because of the extraordinary returns produced by rental income and capital appreciation. The last ten years have witnessed average weekly rents soaring by 37% – or 1.3 times the inflation rate – with buy to let constantly outperforming most other types of investment over the last few years.
But with interest rate hikes posing certain risks for investors, there have been concerns about the strength of the buy to let market industry going forward. That´s why it´s crucial for those who are thinking about expanding their portfolios or entering the buy to let market for the first time to make sure that they are buying in the right place at the right price from distressed sellers.
Industry professionals say that landlords have traditionally tried to stay as close to their rental property as possible since they find it much easier to manage them this way. Two factors that have helped to define their success in the field are local knowledge and the capability to become a ´hands on´ landlord. But recent surveys have revealed that high property prices in other places have compelled them to find buy to let properties in more distant locations. Recent research from buy to let specialist Landlord Mortgages has shown that investors have started expanded their portfolios in places such as the Midlands and Yorkshire.
Experts say that one factor to consider when choosing where to invest is if you are more interested in the rental income as a source of overall profit or if you are more attracted to capital appreciation. Several landlords prefer a certain degree of rental income to provide funding for their investment. Others are more interested in growth in capital.
No matter what condition the property market is in, astute investors know that staying in the market for the long term will always prove to be a lucrative strategy. When you look at the potential profits from both the rental income and capital appreciation, you´ll see why property investors know better than to flee in times when the market is stabilising.
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