Has the Recession burst the buy-to-let bubble?

Nearly a third of Brits (28%) believe buy-to-let property investments will make a loss in the current climate.  A further quarter of Brits (23%) think those invested in the buy-to-let market are likely to just about break even.

Investors with buy-to-let properties are very much feeling the financial squeeze of the current economic climate, after basking in years of relatively easy money.

Not only is the housing market in some areas over supplied with rental properties, but the value of equity or profit in buy to let properties has fallen.

While the interest rates of residential mortgages have fallen recently, buy-to-let mortgage rates have remained more expensive than residential mortgages and landlords are required to find a hefty 25% or more cash deposit to qualify for a buy-to-let mortgage.  

The research also reveals how there is a generation gap when it comes to opinions on the buy-to-let market.

One in ten of those aged over 55 expresses caution and expects those invested in the buy-to-let market to lose a lot of money.

Whereas one in ten 18-34 year olds are slightly more frivolous, believing buy to let properties will still make a lot of money.

Londoners are also most inclined to look on the bright side, with nearly one in ten (8%) saying they believe buy-to-let property investments are still a good opportunity to make a lot of money.                                                                                                                                                                                   David Elms, chief executive of Unbiased.co.uk, said: "The years of the booming property market made investing in bricks and mortar very attractive.

"But unfortunately this boom couldn’t continue forever and those invested in the buy-to-let property market may now be facing losses due to the current economic climate.

"Furthermore, the number of buy-to-let mortgages on offer has greatly reduced, meaning those lenders remaining in the buy-to-let space have tightened their lending criteria making funding even harder to find for potential landlords.  

"If you are considering becoming a buy-to-let landlord, or if you are struggling with existing mortgage repayments, we urge you to speak to a whole of market mortgage adviser for the best possible advice on your situation.

"A whole of market mortgage adviser can also talk you through the opportunities and potential pitfalls of the buy-to-let market and whether this is appropriate for you."

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0 thoughts on “Has the Recession burst the buy-to-let bubble?

  1. Derek Jones

    “Buy-to-let” made promises it could never deliver on. It was fuelled by a generation of greedy estate agents, letting agents, mortgage brokers and lenders who KNEW it could not last forever, but were determined to ride the wave as long as they could. Most have now received their just desserts, along with naive private “investors” and speculators who thought it was a get-rich-quick scheme, but have found out the hard way that it never could be. They allowed themselves to be duped into buying the wrong properties at inflated prices that would never make a profit either through re-sale or rental operation. I have little sympathy with any of them.

    Property is a serious business, with plenty of pitfalls for the unwary. How many of these “buy-to-let” investors ever stopped to consider the TRUE cost of owning AND maintaining rental property? Or what the LONG-TERM prospects were for house price inflation (which is what drove their desire to invest), based on historic trends? Or what cover they needed in case of a fall in demand, fall in value of their assets, or change in their personal circumstances? Did they ever consider their responsibilities to their tenants, if the worst happened?

    Serious investors like myself have been angered and frustrated for years by the damage done to the market through the antics of the money industry, the estate/lettings agency sector and greedy speculators. Only when the last of them is finally driven out of the market can serious professional landlords and tenants look forward to a return to stability and commonsense. The housing market will remain shaky until salaries catch up with rents and house prices again. That will take years.

    But how will it be before the next wave of lemmings emerges, ready to listen to the rubbish from lenders and their lackeys, and to throw themselves off a financial cliff? Already, the all-too-familiar signs are starting to emerge once again . . .

  2. Peter Rollings

    I am interested to read the comments of Derek Jones, a ‘serious investor’ whatever that means. All investments carry risk and there are pitfalls for the unwary. The property market is no exception. Of course there are a number of ‘buy to let’ investors who have lost money on their investments however I would guess they are far outweighed by those who have geared themselves sensibly and have seen the capital value of their investments grow substantially at the same time as having a regular income. Those that bought multiple 1 bed flats in city centres where supply far outweighed demand will not be in this category.
    Long term growth prospects for property are excellent and in a savings climate that is paying a pittance the case for investing in property is more compelling than ever, not less. It should not be forgotten, property is a long term play based on a 5% approx gross yield plus capital appreciation.
    I fear that Derek merely wishes to have the market back to himself and a relatively tiny group of so called ‘serious investors’.