2009 Looks Like Being a Great Opportunity for Landlords
Mark Garner founder of www.LettingZone.com believes 2009 will be a great year for professional landlords.
Increasing tenant demand coupled with falling property values and falling interest rates is setting up 2009 to be a fantastic year for landlords, who have mortgage deposits available. By the spring 2009 Mark believes lending will start to increase again as lenders step up to the plate and increase their lending to meet the increasing demand. Bank of England base rates may be soon approaching 1% or lower so we may even see some mortgage products approaching 4% or even lower. Nick Blunt, Head of Business Development at the leading brokers Mortgage for Business believes by end of Quarter1 2009 we should start to see some more attractive rates in the market for landlords. This is all fantastic news for all landlords looking to increase their portfolio and provide homes for people.
Loan to value levels may only be 75% but for professional landlords this will be a great buying opportunity as rental yields in some areas may approach 8% and mortgage rates will be approaching 4% or lower. Roger Bootle the managing director of Capital Economics and economic advisor to Deloitte believes base rates may even get very near to 0%.
Buying property at the right price is absolutely critical and in a recession the best place to buy will be at auctions where all sellers are highly motivated. Repossessions may reach 75,000 in 2009 according to the Council of Mortgage Lenders and many of these will be sold through auctions. Buyers with the required mortgage deposits will be Kings and provide a much needed base to this residential housing market.
Mark is pleased to see Mathematics is back in favour with schools who are now actively promoting maths and science to children as a good choice for the future, I am sure all landlords will understand and relish the idea of a rental yield to interest rate differential approaching 4%, or even greater. This should comfortably see landlords achieve a cash return their investment in the region of 6 to 12% on their investments (their deposit) each year. Short term (the next 2-3 years) a healthy cash return on their investment is probably all landlords will see, however when the economy starts to pick up landlords will start to see some capital growth as well which will be the icing on the cake. In markets like today it is hard to see where else such returns on your cash savings could be achieved.
Mark has been a full time landlord for over 12 years and has a substantial portfolio in Kent. He remembers back to his first few BTL mortgages with Paragon Mortgages who at the time asked everyone for a 25% deposit, rent to interest cover of 125% and proof of other personal income. The amazing thing now Mark says is we have come back to very place we started from and he feels what was great business sense then for landlords will be the same now. Mark says cash is King especially in down markets like these but you need to be absolutely certain about the location and type of property you buy, much more so than in rising markets where most investors gain regardless. Property is a long term investment which means you should be planning to hold your property for at least 10 to 15 years.
At times like this it is absolutely essential to keep up to speed with all the latest news affecting the residential rental property market and that is why 8 years ago Mark founded www.LettingZone.com as he wanted to help other like minded landlords. It is critical in times like these to manage your cost base very closely and that is exactly what LettingZone does by putting landlords in touch with excellent products and services at great prices.
LettingZone provides all the latest news, products and services required by landlords to run their lettings business and with over 50,000 regular visitors LettingZone continues to go form strength to strength. LettingZone always listens to their visitor feedback and they have now included a much requested Free ‘Ask the Expert’ facility which is maintained by some of the UK’s leading Landlord Experts, quickly and simply giving landlords the answers they require.
