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As landlords continue to look for signals in the letting sector to guide them in their business decisions over the next few years, once more the picture in the industry becomes confused.
Just as the pundits are predicting a double dip for the property market, one of the UK’s leading lenders reports a growth in selling prices for the month of October. The Halifax bank reports that prices in October show a marked increase of 1.8% on the September figures. Somewhat of a surprise as most experts in the industry were expecting a lower sale figure which would reaffirm their thoughts that the market was back in a slump.
Year on year figures were not so good. Although there was an increase of 1.2% compared to last October, this was the smallest monthly year on year increase for some time. In fact December 2009 was the last time a year on year month provided a lower increase.
With mortgage providers across the nation reporting lower levels of take up month on month, the figures have really bamboozled the experts. Although the September drop in house prices was massive (around 3.7%) and most people in the business did not expect the same drop again, the figures are definitely better than most envisaged and are at least encouraging.
For landlords looking to extend their portfolio while house prices were low and rental yields showing every sign of going up for the foreseeable future, the figures will definitely throw a spanner in the works. Should they be on the lookout for cheap landlord insurance to protect any new properties they buy now, or should they ignore the September increase and gamble on the price of property falling even further as the austerity measures bite.
The availability of buy-to-let mortgages, although still not great has improved somewhat over the last few months, aided by new lenders coming into the market. There is no doubt also that tenants are in multiple supply at this moment in time, so what should a landlord do? If the market is to believed, then landlords in and around the capital can look to extend their portfolios with little worry, if they have the funds in place. Landlords elsewhere may be wiser to adopt a wait and see policy.