Are buy to lets going down the pan

Depending on which news stories you read, buy to let is either booming or very quickly going down the drain with the rest of the property market.

The buy to let property market seems to be a bit of an enigma at the moment, with reports in the media that average rents have topped the £1000 per month mark and contrasting with news that some let properties have lost up to 50 per cent of their value at auction.

With the property market slump getting worse, the Halifax and Nationwide put the monthly change for May as a 2.4 – 2.5 per cent drop and an annual drop of 3.8 – 4.4 per cent, more and more people are deciding to rent rather risk purchasing in a falling market.

This means for the right areas rents have boomed and not just from the first time buyer market struggling to get on the property ladder but also from families and those looking to downsize who have sold and are now bidding their time.

This has lead to a practice that was traditionally part of the house buying market, gazumping. With landlords being able to cherry pick the best tenants from a large pool of potentials; it’s becoming quite clear that people are losing out if they don’t have their deposit with them there and then.

However this isn’t the experience for the whole country. The buy to let market for 1 bed flats, for example, has seen an explosion in new build properties flood the market and not just in the north of England.

Flats and apartments have sprung up across the country with house builders looking to cash in while the market was hot. Now with the credit squeeze in full swing and the mortgage lenders raising two year fixed interest rates above 7 per cent it will get harder still for buyers to purchase.

June 30^th 2008

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