Buy to let investors who take a long-term view should get bailed out by rent rises

Posted under General by Alan

“The next couple of years are going to be rather challenging, no doubt. We are expecting house prices to fall further. But even the truly big bears are also talking about falls of just over 10 per cent or so over two years,” the chief economist for the Royal Institute of Chartered Surveyors (Rics), Simon Rubinsohn has been recently quoted as saying. According to their research, rents are rising in most regions.

“If tenant demand stays firm, we are likely to see void periods diminish as well. Those landlords who have done their homework, have quite a reasonable amount of equity in their property, and take a long-term view should get bailed out by rent rises,” he added.

In the near term though, things are not looking bright. Just as with any other type of borrowing, buy to let loans are not anymore easier to come by. In fact, lenders, who offer buy to let loans, are getting picky and choosy about their borrowers. Those who had piled into off-plan flats, in inner city ‘hotspots’, are said to be worst affected.

Their rental incomes in some cases are almost hundreds of pounds short – of both their mortgage payments and their expectations. Desperate to remortgage or sell, many have been however, prevented from doing either. They have got trapped in negative equity, as their respective property values have plunged to as little as half what they paid, in quite a few cases.