The property price drop left many homeowners stuck in negative equity, unable to move in any direction on the housing ladder, but property investment in the UK will see a good return in the long term despite the current weak property market, according to a new forecast by services company PriceWaterhouseCoopers (PWC).
The company have predicted that once the property sales market has recovered from its current downturn, between 2012 and 2025 UK property prices will still see real term capital growth at an average of 2% per year, with the current lack of housing stock fuelling property price increases.
Although the growth rate is not as good as the 4% yearly rises seen between 1984 and 2007 it will be welcomed by property investors and homeowners who have seen a drop in average house prices of around 20% over the last five years.
In recent months the global economic situation has caused mortgage lenders to focus on equity-rich buyers and tighten their lending criteria, making it tougher for people to take out mortgages.
It is those reasons and the development of specialist products and services for landlords that are credited to the upsurge in the UK Buy-To-Let market, with tenant demand outstripping the supply of suitable rental properties, driving rental prices higher and providing landlords with increasing rental yields.
The PWC study predicts that, over the 13 years, before tax, UK landlords with buy-to-let properties in the PRS could expect average returns of 3% a year after deducting running and property maintenance costs.
The figures provide a good starting point for landlords to base their rental business on, however there are ways to increase the rental yield and take steps to get only the best tenants and keep the rent money flowing in, such as Tenant Referencing and Rent Guarantee insurance offered by Legal 4 Landlords.
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