Market conditions are ripe for buy-to-let investment

14 Jun 2011

Unlike our European counterparts the British have always aspired to owning their own homes with the expectation in many cases that it is in investment that will one day reap a profit. It is the historic upward movement in capital values that has turned the dial on residential investment, whether that is buying a home or a buy-to-let investment, which explains why we are so obsessed with house prices and why our housing market is not driven by rental performance.

Setting yourself up as a landlord and creating a residential property portfolio that is large enough to provide adequate returns is time-consuming and often difficult without expert advice. Large residential portfolios do not come up for sale very often. What is more previous stamp duty tax rules on bulk purchases were off-putting.

Location, which is always important in property, is even more so in the rented sector. Professionals want to rent well-managed accommodation close to where they work, so lack of supply is a stumbling block.

Rental incomes have not always justified the intensive management fees required to manage professionally a large block of flats.

With developers keen to build and sell, and a scarcity of large scale investors prepared to take on the time-intensive task of running a residential rental business, a professionally managed rental sector has flourished in the UK.

But all this may be about to change. With a shortage of first time buyers, the difficulty in securing mortgage finance, increasing rents and the removal of some onerous stamp duty requirements, the equation is finally moving in favour of a rental market.

A recently commissioned independent survey found that landlords are increasingly optimistic about the buy-to-let market buoyed by an increase in the demand for rental properties. Some 86% of those surveyed said that they were planning to maintain or expand their portfolios this year.

What is more, with on 11% of all landlords accounting for 73% of all buy-to-let properties, there is scope for more landlords, including institutional investors to enter the market.

scottfraser currently have some exceptional buy-to-let opportunities. Contact me direct for more information on how we can help you increase or start your rental portfolio.

Lucy Taylor
Operations Director - Head Office
01865 759500 / lucy@scottfraser.co.uk