Figures released by the Council of Mortgage Lenders (CML) suggest that landlords as well as home-owners are managing their purse strings a little better as the fragile financial recovery continues.
The CML report shows that property repossessions in the second quarter of 2010 fell to 9,400 a drop of 400 on the January to March figures. Although this suggests that the recovery is still on track, a property expert urged caution and diligence to would be residential landlords looking to enter the business.
Tom Entwhistle, a director of LandlordZone.co.uk, believes that any decision to apply for a buy to let mortgage should be rigorously researched before signing on the dotted line. Although he recognises the sector is buoyant at the moment, he believes it is not simply a case of identifying a property and looking for cheap landlord insurance, making a purchase in the correct location is paramount to the future success of the venture.
“Assessing rental demand in the location is crucial” he says, as is the amount of rent the landlord can expect. Landlords must remember that actually sourcing the finance will not be easy at the moment and should be diligent enough to look through the various offers before coming to a decision.
Purchasing in the right area will alleviate the problem of void periods, so a neighbourhood slightly run down but peopled by students could well show a more lucrative return than one in a better area but with less rental demand.