The last of our Buy to Let seminar reports comes from Adam Challis, Head of Research at Hamptons International who provides a Buy to Let Market Comment.
The State of the lettings market
Lending on buy to let has improved since beginning of 2009 – growth of around 60% in this period. this is anticipated to continue to 2015 at least and sits in a context of an environment where general lending fell.
The performance of buy to let investments varies depending on region. In the main, return tends to be dominated by capital growth rather than rental income but in some areas recently landlords return has been driven only by income due to market conditions.
It is difficult to track the rental market, Hamptons has developed one with Prime Location on a pound per square foot basis. It throws out some interesting information on a heat map that can be found on hamptonsinternational.co.uk.
I would encourage anyone considering a buy to let purchase to thoroughly research the performance of different property types in the area you wish to purchase. Again this will differ with region but should form the basis of your investment/letting strategy.
Lots of opportunities in key areas, e.g. Olympic short-lets, however you need to be aware that the likelihood of being stuck with a vacant property come September 2012 could be a challenge. Getting a long-term sitting tenant might be a better option.
Student lets can result in capital expenditure due to void periods and an active management role is often needed.
Whats next for buy to Let?
The growth of the buy to let sector will move to about 20% by 2015 and this has caught the interest of the institute of investors. Lots of significant large scale investors are now entering the sector and increasing the sophistication and quality of the properties and the processes around buy to let. To generate the best possible returns smaller scale landlords need to take a sophisticated approach.