Landlords looking to expand their portfolio are being warned to research the area well before they part with a deposit as experts warn the downturn could still spoil the party for property investors.
At a time when landlords are experiencing greater rental achievements than ever before, industry experts, in the guise of buy-to-let providers Assetz, are advising landlords to carefully analyse the location of their next buy before they even think about buying landlord insurance.
Stuart Law, the chief executive of Assetz, believes prudence should be the watch word of buy-to let investors in the first part of the year or until the financial markets settle down. He explained: “Now is not the time to take a punt on potentially ‘up and coming’ locations, or those that are dependent on sectors which are at risk from high levels of unemployment.”
He went on: “The deepening Eurozone crisis is far from over and it will no doubt continue to impact the property market here in the UK by limiting the amount banks are able to lend and stifling consumer confidence. Buying in a strong location will help deliver a reliable rental income and a good supply of quality tenants, albeit alongside only modest capital growth for the time being.”
Property investors may also find first time buyers are more of a threat in the coming months, as the Halifax Bank report mortgages are more affordable now than ever before. The bank says that the average mortgage now only represents about a quarter of peoples disposable income whereas just five years ago it was almost half. They say that couples who can muster the big deposits required should have no problems paying their mortgage. The news will not be welcomed by many landlords who found they could negotiate knock down prices for properties in 2011 due to the absence of other interested parties, however, there still seems plenty of life in the rentals business and tenant demand shows no sign of weakening just yet.