Date 19 July 2011
Falling house prices, or at least a slowdown in capital growth, depending on which area of the Country you live in, is bad news for many not least those building a property nest egg as a pension pot to fund their future retirement.
However, property investors shouldn’t though run for the hills too quickly in the face of the endless supply of bad news stories.
Average rental prices in London broke through the £1,000 a month barrier for the first time in June 2011 and it is taking very little time to find tenants when coming to market. And it isn’t just a London trend as the latest LSL Property Services Buy-to-let index highlights rents across the Country rising by 0.7% in June, up 4.1% on the year to date to an average of £701 per month.
As obtaining mortgage finance remains a challenging proposition for a significant proportion of the population, and with rising costs of living deterring or preventing many saving for a deposit, this is pushing large numbers of people into the private rental sector that may otherwise look to buy themselves.
Increasing rental prices don’t appear to be putting people off the sector as research by flat sharing website Easyroomate shows that nationwide there are over four available tenants per room, and this rises to double figures in rental hotspots like Cambridge and Brighton.
So whilst house prices remain fairly stagnant at best and capital appreciation in the short to medium term may not be an incentive to investment in buy-to-let property, investors who take a more long term view and focus initially on rental income can currently acquire residential property at somewhat higher yields than may have been the case a few years ago.
For those who can look past the potential for the further capital depreciation likely for many residential assets in the immediate future and focus on the strength and security of short term cashflow investment in the buy-to-let sector, the right property in the right area is an attractive proposition.
If you would like more information or advice relating to a specific matter, please do not hesitate to contact Gary Dunger on 01727 798020 or by email at gary.dunger@salaw.com.
© SA LAW 2011
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