Property-Investment
Your Free Guide To The Best Locations For Property-Investment
Property-investment is big business and professional landlords are always looking for the next best place to put their money and get a good return. In order to help, some lenders are compiling their own lists of the best places for property-investment, which may guide landlords in making their next buy to let decision.
For example, we have recently collated data from the Council of Mortgage Lenders (CML Sept. 2008) on the number and value of buy to let mortgages, as well as data on rents from the Department for Communities and Local Government and data on rate of return from the Association of Residential Letting Agents with its own data on property-investment by postcode area to give a shortlist of hotspots. According to the CML, Birmingham Midshires was the largest buy to let mortgage lender in the first half of 2008.
Property-investment is a long term proposition, with two main aspects driving whether landlords consider property for BTL. The first is the rental yield. This is how much they can get to rent the property on a monthly or annual basis. This is a medium term investment. The long term investment comes from the increase in the value of the BTL rental property, known as capital appreciation. Together, these two factors give an overall rate of return on an investment, which is usually expressed as a percentage.
BTL Hotspots & Tips
According to our research (ARLA Jan. 2008), average rents for property-investment in the private rented sector have risen by an average of 4% for houses and 2% for flats in the three months to the end of February. These averages have been boosted by a 9% rise in Prime Central London and a 5% rise away from the South East. In the South East itself, rents fell slightly, by 2% for houses and 5% for flats. These property-investment figures are seen as emphasising the start of a new housing cycle.
According to ARLA (Sept. 2008), property-investment landlords in the Private Rented Sector continue to remain calm in the face of the current financial storms. Over three quarters of those questioned about property-investment for the third quarter ARLA Review and Index, published on Monday 29th September 2008, will not sell their investments because of falling house prices. Instead, they expect to keep their property-investment portfolios for an average of over 16 years. A further quarter intend to hold their investments for more than 20 years.
According to the CML (Aug. 2008) the investment market in the buy to let sector for the first half of 2008 showed 144,600 gross mortgage advances. This is slightly down on both 2006 and 2007 figures but was expected in the current mortgage climate. These figures are still higher than 2005, showing that there is still demand for property-investment.
