Whilst landlords report an increased demand for property,
they are struggling to increase the size of their
property portfolio. The lack of available finance
and sufficient cashflow appear to be key factors for
many struggling landlords.
property boom prior to 2007 and the ease of refinancing
saw a rush of new investors to the market, buying
up property for rental purposes, hoping for a further
increase in property prices, were wiped out by the
economic crash and bursting of the property bubble.
Bail out of the UK banking system and amalgamation
of some of the biggest banks on the high street still
haunts the UK economy. No one bank trusts any other
bank so they are even reluctant to lend to each other
let alone investors. Restrictions put in place by
the LloydsTSB/Halifax/Bank of Scotland (HBOS) banks
have included limiting the number of mortgage products
allowed to only 3 (down from the previously allowed
are susceptible to feeling the pinch as the struggling
economy bites harder.
insurance premiums have risen alongside increasing
maintenance and repair costs and for the rising number
of landlords unfortunate enough to be subject to “Bad
Tenants” who have the expense of the eviction
process it can spell financial disaster.
investors have been forced to adapt their investment
strategies, some exploring the potential effectiveness
of using Lease Options to control and profit from
property as a way of expanding their property portfolio’s
and there are those investors who have been forced
to adapt their financial strategies in order to protect
existing assets focusing on rental yield rather than
capital appreciation, for some this has meant disaster
and repossession as their finances became stretched
to breaking point.
bottom line for investors to remember is:
prices are still falling, meaning vendors are becoming
even more motivated to sell their financial millstone
and get off the property ladder. If you are able to
obtain finance use it wisely! Don’t overstretch
your precious finances and make generous contingency
plans. As long as the rental income exceeds the cost
of the mortgage, landlord insurance and maintenance
of the rental property then your investment remains
as “safe as houses”.
Luck with your investing, I hope you profit from property!
Data from Halifax & Housefund.co.uk