Low Interest Rates Tempting Investors
31 March 2009
With interest rates and property prices at an all time low, buy to let property investors are increasingly being tempted back into the market, says a report from Accord Lets.
According to the Birmingham letting agents the latest cut in the interest rate announced by the Bank of England this month is certain to increase the number of people looking at investing in property.
"The maths aren't difficult," said Carl Mimmack, Managing Director of the privately owned specialist residential letting agency.
"People are no longer getting a decent return on their savings with the interest rate at 0.5 per cent. But if they invest that money in property to let they can expect a return of on average between four and five per cent in rental yield.
"And if they view their investment in the long-term they can expect capital appreciation too when prices start to rise again.”
The British Property Federation is advising house hunters to follow our European neighbours and rent instead of buying and this can only be good news for landlords and potential buy to let property investors alike.
Renting property is a lot more common in Europe than here in the UK, and offers people flexibility and a relief from the potential pitfalls of investing in a large mortgage. Across Europe, on average 37% of a country's homes are in the rental sector, in Germany for example rental accounts for more than 55% of all households, in Austria it is nearly 49% and in the Netherlands 45% of homes are rented. In the UK only 31% of households are in the rental sector, this showing a marked departure from the rest of Europe.
Mr. Mimmack revealed that Accord Lets is enjoying its busiest year ever, he said, “People need somewhere to live and when they're too cautious to commit to buying because they think prices will fall further, so they stay in rented accommodation longer.
"Because of this we are seeing landlords adding to their portfolios and new investors coming to the market".
However, he stressed that the choice of buy to let property is crucial. "Today's tenants are very clear about what they want and for what they will pay a premium. I urge anyone thinking of investing in buy to let to take advice first from a specialist agency such as Accord. We can advise on every aspect from finding a suitable property to finding tenants."
Accord Lets specialise in property to let in Birmingham, Warwick and Leamington Spa, and can offer advice and support to both landlords and tenants. They have a wide portfolio of properties to rent ranging from flats and apartments in Birmingham City Centre to family homes throughout Warwick and Leamington Spa.