Landlords ‘need good property market understanding to benefit from buy-to-let boom’

Landlords purchased 20 per cent more property last year for the purpose of buy-to-let investments, according to latest figures from The Landlord Syndicate.

The organisation, which represents landlords around the UK, suggested that landlords who want to take advantage of cheaper housing prices and higher rents should think carefully about affordability, location and commitment to ensure they maximise benefits from the market surge and are not caught short in the long term.

Simon Thompson, Chairman of The Landlord Syndicate comments “Before the recession, rising house prices fuelled investors, who were really speculators, to buy ‘discounted’ flats. The resulting house price crash left many of them holding property that would never pay for itself by rents because too many similar properties were grouped in a development, pushing down yields and prices.”

He added that for the foreseeable future, capital growth will be negligible and rental yields will be crucial.

Furthermore, the body urged that new landlords should aim to hold a long-term yield, looking to sensible mortgages and low costs as well as steadily increasing profits through the rising rents.

Kesh Thukaram, member of The Landlord Syndicate and managing director of Best Insurance said: “Today 25 per cent of the new-buy properties we reference are houses compared to two years ago. These are mainly traditional three bedroom semi-detached or terraced properties and houses in multiple occupation, subsequently the number of tenants we reference with children has also increased by 30 per cent in the last 12 months.”

Mr Thompson explained that buy-to-let will become increasingly regulated over the next 10 years.

“So whilst the boom may be back, many inexperienced landlords or would be investors need to understand the sector more than they did in the 1990′s and 2000′s. Fines for things like failing to protect or failing to licence HMO properties are onerous and can wipe out any short term gains. And that’s without considering tax implications,” he said.