LandlordZONE Newsletter - October 2007

October 2007 Issue 23
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Welcome from the Editor:

Welcome to the Oct 2007 issue of the LandlordZONE Newsletter.

We’re living in turbulent times.

If you are interested in the broader picture from a renowned authority I recommend you read Alan Greenspan’s timely biography—The Age of Turbulence—Adventures in a New World.  Greenspan, chairman of US federal reserve for nearly 20 years, knows a thing or two about markets and has produced a very readable analysis.

Following the credit crunch of recent weeks, triggered by the US housing downturn and the emergence of the so called “sub-prime” mortgage debacle, we’re all now wondering if the UK housing market will follow suit.

A bleak warning by the IMF that Britain’s homes are 40% overvalued—higher than the US market before it’s collapse, at 9 times average earnings (up from 5 times in 2001) - does nothing to allay our fears.

But if the worst should happen, and it might not - then what?

Well, there’s a strong letting market in the UK, a continuing housing shortage and low unemployment.

If you are not overstretched financially and you can manage your tenancies well, why worry about the value of your property in the short-term?

In fact there could be some real buying opportunities in the near future for those with the resources to add to their portfolios, but use good advisors and brokers.

All this is nothing new - we could be going back to normal conditions, where making money from property is about wise investments, managing tenancies well and making long-term gains.

Tom Entwistle, Editor, LandlordZONE.co.uk

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Buy to Let Motgages

This edition of the LandlordZONE Newsletter looks at the some issues involved with mortgages and the current market conditions for buy to let.

The buy to let mortgage, introduced 11 years ago, has helped, along with the AST, to transform the rental market in the UK at a time when social and demographic changes demanded a big increase in rental accommodation. This has been good for the country and the economy.

However, during this time house price inflation has been unprecedented—the average house price has risen threefold since 1991.

This has led to claims from some quarters that BTL landlords are to blame for the plight of first time buyers and that tax relief on buy to let mortgages should be removed.

The five successive interest rate rises, now the credit crunch and so called “sub-prime” debacle in the US, have led to a slowing down of the housing market and to lenders being much more circumspect when it comes to approving loans.

Both these claims need to be challenged as far as genuine investor BTL landlord is concerned!

The speculators, some of whom have been buying to leave empty, and the growing number of second home owners, have no doubt had some effect on distorting the housing market, though this could change rapidly if we see a real downturn.

A recent CAB report claims that some landlords are using the possession procedure (Section 21) to avoid repairs, making their tenants live in squalor.

The so called below market value (BMV) strategy now being advocated by some advisors (nothing new if you’re a savvy investor landlord), if it is not applied ethically, is likely to be further grist to the mill to the critics of BTL.

Several high profile TV programmes out in the last week have been highlighting the seedier side of property investment and showing some of the horror stories on both sides—landlord AND tenant.

All of this does the image of the landlord no good whatsoever, as if it wasn’t bad enough already in some quarters.

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This issue is wholly sponsored by Cover4LetProperty one of the leading providers of insurance for the rental property market.

Landlord’s Insurance from Coverlet4LetProperty.co.uk

Landlord’s Insurance from Cover4LetProperty

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