Buy to Let Landlords are more exposed to risk than other UK property owners and the Association Residential Letting Agents (ARLA) predicts that 2009 will be a tough year for investor landlords. ARLA is predicting that there will be an increase in landlords defaulting on their monthly mortgage payments over the coming months, and an increased rate of repossessions as a result.
The Association of Residential Lettings Agents was formed in 1981 as the professional and regulatory body for letting agents in the UK. One of the main areas of concern for ARLA is that the the Mortgage Support Scheme recently announced by the Government will not cover buy-to-let landlords, tenants will also be at greater risk of homelessness into 2009.
However, ARLA expects to see a revival of the buy-to-let market by the end of next year. Ian Potter, Operations Manager of ARLA, comments: “With house prices continuing to fall, we’re expecting to see a good deal of investor landlords enticed back into buying up properties, as they recognise that bricks and mortar are still the most solid long-term investment. This adage is particularly apt when considering the prospect of further falls in interest rates that will impinge on savings accounts.
“I’m also hopeful that many of the ‘reluctant landlords’ we saw entering the market as a result of falling house prices will be encouraged by their rental returns and see the benefits of buying to let. All the market needs is a bit of confidence and then we will see it become freed up and stock moving again.”
Ian Potter says that rental returns will continue to be patchy in 2009, with large disparities even within towns.
Mr Potter believes that there are properties that have come down in price in greater proportion to others, meaning that there will be a greater bounce back in price when the market does finally improve.
For those wanting to enter the lettings market in the New Year, he has the following advice: “Try to identify areas where a property can be let out more easily – those areas with high employment and a greater proportion of people looking for short term rents. The large student populations of university towns are a good example.”
