Poor returns from savings and the continuing strong demand for rental property will be the driving factors behind an increase in property investment in the UK buy to let (BTL) market.
However, taking a gamble on certain locations could be risky for would-be Buy To Let landlords with unemployment rising, Government welfare reforms and the fallout from the Eurozone crisis still looming.
UK property investors are urged to seek to purchase Buy-To-Let properties in popular residential areas with a good infrastructure and a strong employment market, such as upmarket commuter hotspots around all major cities.
Buyer and tenant demand will continue to outstrip the current supply of UK housing stock, supporting property price growth.
Property investors should avoid areas that are reliant on manufacturing or the public sector, during 2012 as these areas may face high levels of unemployment, and with the cap in housing benefit payments now in effect, rental yields may not be as healthy. Such areas are expected to see relatively low property transaction levels in 2012 and a fall in house values that could be more than 5%.
By conducting thorough Due Diligence property investors can purchase Buy-To-Let properties in strong locations that will deliver a reliable rental incomes and a good supply of quality tenants, in addition to a modest capital growth
A list of useful Due Diligence sites to aid property investors in their search for the best areas can be found here
Private Rental Sector property rents are expected to continue growing strongly in most areas, hopefully, in the region of +5% this year, due to continued restricted mortgage lending and poor employment prospects leaving a whole generation of potential first time buyers (FTB’s) with little prospect of buying a home.
To ensure rental income remains constant throughout the duration of a tenancy, landlords can utilise Rent Guarantee insurance to keep a regular income coming in from their buy-to-let property.
Policies offered by Legal 4 Landlords include 6 and 12 Month Rent Guarantee insurance policies designed to protect landlords whose tenants default on rent payments.
Rent Guarantee insurance can also provide additional cover to meet the cost of legal proceedings for the eviction of defaulting tenants from rented properties.