The results of a recent National Landlords Association (NLA) landlord survey show that landlords’ confidence in continuing capital gains has almost trebled over the last two years.
The figures show it has risen from 18% to 52%, but the results also show that 32% of landlords are saying they might not be able to meet their mortgage repayments if interest rates rise in the near future.
Despite these survey findings the NLA is wary of the imagined capital gains prospects and is talking them down.
The warning comes as many retirees may be pondering the possibility of investing their pention pots into investment property as pension freedom day approaches in April.
According to the Financial Times housing stock has appreciate in value by £177 billion over just the last five years. However, with price rises beginning to level off, and more supply coming on to the rental market through the Government’s built-to-let initiative and institutional investment, this might change in the near future.
‘It certainly feels like a great time to be looking at buy to let a means of additional income but you cannot simply rely on the prospect of capital gains as an investment strategy,’ said Carolyn Uphill, NLA chairman.
‘A lot is being made of capital growth but landlords must remember they are in the business of providing homes for people. It’s a risky investment and the prospect of capital gains is only realised if and when the property is sold,’ she explained.
‘With house prices levelling off and inevitable rises to interest rates as the economy improves, anyone considering investing in buy to let should think carefully before taking the plunge. This means planning for the long term and looking to sustainable yields, not hoping for a windfall in capital appreciation,’ she said.
The NLA is currently running a campaign entitled “Rent, Risk Resolve”, which aims to highlight the potential risks to buy-to-let landlords in the private rented sector.
— LandlordZONE (@LandlordZONE) January 22, 2015