Why Buying Investment Property Is Still Considered a Good Move

Although some people have the perception that the housing market is undergoing a stabilization, there are still many who consider buying investment property a viable strategy now that prices are falling and yields are going up. This is because the buy to let sector is currently experiencing increasing rents and shorter void periods – factors that lead to lower voids compared to those of typical borrowers. Moreover, by buying discounted property from distressed sellers, it is possible for property investors to earn instant profits from day one.

Buoyant buy to let market

Recent research by Gumtree Rentals Index revealed that buy to let, particularly in London, remains buoyant because of a "continental attitude of renting." Results showed that four renters out of five are unable to afford a house, but they are contented and are willing to rent their home for the foreseeable future. Meanwhile, rents in London have soared by 2% in the last three months and 7.8% over the previous year. Property investors – specifically those in Edinburgh, Leeds and Bristol – have gained significant profits with yearly rent increases between 0.9 and 3.1%, the Index reported.

Why buy to let is still a popular choice

One of the reasons that buy to let has increasingly become popular is the rise in legal migration to the UK, according to a Paragon Mortgages survey. It has been reported that migration is adding to the UK population by 0.3% a year. The study also suggested that the addition of Romania and Bulgaria would further propel the rise of buy to let. Many of these migrants were regular renters who stayed in rented property for longer periods than non-migrants. As more of them enter the country, there would also be a need for more buy to let property.

In addition to the growth in migration, the Department for Communities and Local Government also states that the country needs over 200,000 households each year to meet anticipated housing demand. However experts acknowledge that there is a major deficit in housing supply. This then allows buy to let investors and landlords to fill in the slack and therefore increase their prospects.

With industry professionals predicting positive long term trends, it is only natural for landlords to consider these when thinking about applying for buy to let mortgages. Compared to other forms of investments, the returns for the buy to let industry are often far better when you buy at the bottom of the property cycle – the ability to leverage your investments also amplifies returns. Research suggests that the next decade will see significant increases in the rental sector as more landlords and investors plan to increase their portfolios.

Being successful in buy to let

To flourish in the buy to let industry, property investors should consider a few significant factors. One is finding the balance between getting the best out of your property and limiting spending where needed. Likewise, it is essential for landlords to ensure the appropriate rental cover and the proper mortgage deal for their situation. But most importantly, you have to buy property from distressed sellers who opt for a quick sale as this will enable you to get the best prices as well as earn significant profits.