UK Newpapers Creating Property Investment Speculation
Newspaper headlines last weekend suggested that PRS rents are expected to soar 18% over five years with property investors able to secure an annual 8% return by putting their cash into buy-to-let property.
Apparently according to newspaper reports, rents in London are scheduled to increase even more (up to 26% in 5 years) due to demand by younger people unable to get on to the property ladder.
It has always been true that by putting your money into property, you will be assured of a great rental yield destined only to increase and as we know property market is cyclical and property values will eventually go back up.
When examining the figures more closely:
- A headline 7.8% yield in London produces a return of 40.3% over five years.
This reduces to just 3.8% once management fees, repairs, insurance and void periods are taken into account.
Estate agent, Savills, have also expressed concern about UK property prices, warning of a potential 2% fall in property values across the UK during 2013 and predict only a modest rise in property values of only 11.5% by 2017.
Caution is needed by property investors if the buy-to-let property purchase is funded by a typical buy to let mortgage.
A 2-year fixed mortgage deal of around 3.6% will provide a healthy return when charging around £500 pcm rent, but after this fixed term expires, it remains uncertain where the Bank of England’s (BoE) interest rates will be by 2015?
Investors need to plan ahead for maximum returns
There is little doubt that the old mantra is true that we are a congested island with a growing population and there is an ever increasing demand for property particularly in view of changing lifestyle habits, more single parent families and single occupiers for example.
Property can form part of your life business plan but investors need to be in property for the long haul, the easy gains of the early millennium years are behind us and are not likely to return for many years to come, a chilling thought confirmed recently by the Bank of England (BoE).
Property investors and landlords should be able to afford to subsidise the property during void periods or when repairs and maintenance are needed that outweigh the rental income.
UK property investing has already made many people wealthy and many more are now financially comfortable, but UK property is not the win every time proposition that it once was, at least not for the time being.
However this does not stop property investors from exploring better property investment strategies and expanding new ways to profit from property.
Controversial property investor and best selling author Rob Moore is offering investors free copies of the “Step by step, Zero to Multi Millionaire Property Investor Roadmap” – Grab your copy now!
- Click to share on Facebook (Opens in new window)
- Click to share on Twitter (Opens in new window)
- Click to share on Google+ (Opens in new window)
- Click to share on Tumblr (Opens in new window)
- Click to email this to a friend (Opens in new window)
- Click to share on Reddit (Opens in new window)
- Click to share on Pocket (Opens in new window)
- Click to print (Opens in new window)
- Click to share on Pinterest (Opens in new window)