Buy-to-let is a 'long-term' investment
by Daniel Jones
Investors looking for tenancy agreements
should appreciate that the buy-to-let market requires a long-term approach. This is the view of the Association of Residential Letting Agents (Arla), which suggests landlords need to be aware of their commitments and realise that it is not about making "a quick buck".
"That is where a lot of people got bitten at the point in time where the property market crashed and the mortgages just effectively dried up overnight," says Arla operations manager Ian Potter. "They were working on a very short exit strategy. A landlord coming into it today should be looking at it with a view to a ten to 15-year term."
Last week, Savills claimed that an increase in demand for private rented accommodation has created an opportunity for investors. It forecast residential rental growth of 20.5 per cent over the next five years across the UK, with the number of private rented sector households in the UK rising by one million between 2009/10 and 2015/16.
Savills also predicted a 6.1 per cent average gross yield for residential property in the UK in 2016.
Mr Potter notes that despite the opportunities being presented in the buy-to-let sector, there is a significant hurdle in the way. "There are landlords looking to buy new properties and add to their portfolios, but one of the problems is that there is not the property for them to buy," he explains.
Daniel Burgess, managing director of discountletting.co.uk, agrees that properties are simply not appearing on the market in enough numbers. "Demand for rental property is very high, whilst supply is low," he explains. "This only has one effect on rents, which is that the average rent in London is increasing."
And he predicts that the Olympics will have an effect on the rental market in the capital, though it has so far failed to impact landlords in any real way.
"Obviously, there will be an influx of people renting over the period the Olympics take place and landlords will be able to charge premium rent, but the run-up to the Olympics has made no difference," Mr Burgess explains.
Published on: December 6, 2011
Did you like this article? Share it!