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2012 Property Investment Review

2012 Property Investment Review

Well it’s the end of the year that was supposed to mark the end of the world for mankind and yet we survived and it wasn’t all doom and gloom, 2012 did bring the UK some joy with events and celebrations across the country, including:

For the general public: An inferior team, who hadn’t won anything for over 34 years, winning the 2011/12 Premiership title with virtually the last kick of the season, (not that I am a biased Man Utd fan or anything….), the Queen’s Diamond Jubilee, the Olympics and Paralympics, the end of the double dip recession,

For Property Investors and landlords: 2012 saw the emergence of Rent Guarantee products that are good value for money, property prices continuing to behave like a roller coaster ride but eventually recovering and ending the an average of 1% year up on last year’s prices and lets not forget the return of some decent Buy To Let mortgage products to the UK mortgage marketplace.

How was 2012 for you? Has the year lived up to your expectations and did you achieve any of your property investment goals?

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UK property market not expected to do much this year

Is the UK property sales market dead?

With some property pundits predicting that the UK property sales market is not expected to do very much this year, due to lack of interest, the results of an industry watchdog survey makes light of the reasons behind the property sales stagnation.

The latest research from the Association of Residential Letting Agents (ARLA) has suggested that UK landlords will be less inclined to restructure their property portfolios until better mortgage and financial products become readily available.

With increasing mortgage rates being announced by major lenders and improved loan to value offerings only just starting to return to the marketplace, it may be some time before landlords, who in effect are self employed businessmen, are able to obtain non status property loans again.

The Buy To Let boom, prior to 2007, encouraged amateur investors to snap up multiple properties throughout the UK, in the hope of a large increase in value due to capital appreciation. The housing crash of 2008/9 wiped out much of their perceived equity and left them searching for high yielding rental returns in the PRS in order to meet their BTL mortgage payments.

The ARLA study showed the number of individual landlords expecting to acquire further properties this year has dropped from 27% to only 25%.

Tim Hyatt, President of ARLA, claimed the Private Rented Sector (PRS) is still likely to see growth this year, however, the number of landlords expanding their property portfolios is likely to see a reduction.

Ian Potter, ARLA operations manager, also commented, saying: “A healthy Private Rental Sector is crucial in providing choice and flexibility for consumers across the housing market in 2012 and, ultimately, helping to provide more homes for more people.”

Unable to sell up, investors have become reluctant long term landlords and have struggled to meet mortgage payments due to the economic climate affecting the circumstances of their tenants.

With job losses and pay cuts still ongoing and welfare reforms being pushed through by government, some landlords face an uphill struggle.

They obviously aren’t aware of the rent guarantee product offered by Legal 4 Landlords. In the current economic climate, many landlords find their default rates soar as tenants struggle with rising unemployment and increased bills. Recovering arrears can be difficult and costly for landlords, without any guarantee of success.

Even the thorough tenant referencing cannot predict a tenant falling on hard times and not being able to pay their rent. Landlords need to cover their expenditure if the worst happens. Rent Guarantee’s may make a significant difference to a landlord’s financial survival.

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