Buy to let real estate investment up in the UK, research shows

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UK landlords have bought more property in 2009 despite the recession and now own an average of seven properties compared with just four in 2004, new research shows.

The to let property investors though have increased their portfolios by 11% in thanks to record low interest rates and falling real estate prices, according to the research from the Association of Residential Letting Agents (ARLA).

In the last quarter of 2008 landlords owned an average of 6.3 properties but now it is seven. ARLA said the rise ended the trend for landlords to reduce their property portfolios which began in early 2008. But despite the dip in portfolio sizes seen last year, the average landlord now owns nearly twice as many properties as they did in 2004.

Experience among landlords is also increasing, with the average investor having being in the market for 9.2 years during the third quarter of the year, compared with 7.8 years during the first quarter.

‘Low interest rates and proportionately higher rental yields are making the buy-to-let market attractive again to experienced investors,’ said Ian Potter, operations manager at ARLA. Indeed, the Bank of England’s monetary policy committee brought interest rates down to a record low of 0.5 per cent in March this year and has kept them at this level every month since. A number of economists predict that there will be no change in the cost of borrowing from now until the end of 2010.

There is a huge potential for investment at present, but landlords should take heed from the number of buy to let repossessions that this recession has seen and only borrow what they can realistically manage,’ added Potter.

The National Landlords Association welcomed the research figures. ‘This is good news for the private rented sector and, crucially, means that more homes are being made available. This upturn demonstrates the resilience, and counter-cyclical nature of private-renting that the NLA has long recognised,’ said Chris Norris, Policy Manager of the NLA.

Our members have been reporting for some time that market conditions are improving, and experienced landlords are very keen to make new acquisitions,’ he added.

He warned though that severely restricted lending is still a burden for landlords who want to increase the number of properties in their portfolio. ‘Unfortunately, many have been prevented from expanding their lettings businesses by the lack of available finance in the mortgage market. This should be a major focus for Government at the moment,’ he said.

 

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