News: Long-haul BTL investors optimistic

Wed, 16 Jan 08

BTL investors are optimistic about the year ahead, according to Assetz...

The nature of the UK buy-to-let industry has been shown frequently in recent times to be one dominated, for the most part, of those with long-term plans for their property portfolios. Survey after survey has shown this fact, which explains why the optimism of many investors contrasts with some of the predictions in the media surrounding the industry.

True, the end of the high property inflation of recent years means the prospect of making a short-term killing has receded. But the desire of most investors to make their money over longer periods of time, which enables them to ride out the peaks and troughs of the shorter term, has led to a well-documented majority view which indicates distinct optimism rather than the doom and gloom some have predicted.

This was demonstrated in recent surveys by Alliance & Leicester and Bradford and Bingley in December, plus the Association of Residential Lettings Agents (Arla) earlier this month. Such surveys showed that most buy-to-let investors were in it for the long haul, optimistic about this year and in many cases (four out of ten in the Arla survey) were planning to expand their portfolios.

Profitable pastime

Alliance & Leicester's latest statistics, its new Annual Landlord Index, reveal more about the market. For one thing, most investors would not consider themselves full-time property professionals, with just four per cent describing themselves this way.

Most (87 per cent) see it as a profitable pastime and - providing further evidence of a positive outlook - 64 per cent of those surveyed were happy with their rental income and planned to go on letting out their properties, with the average investment planned to last 18 years, even longer than the 16.7 years Arla recorded. In contrast, only one in five said theirs was a short-term venture.

Moreover, long-term planning lies at the heart of some of the most common uses for the income gained. Just 11 per cent gain the majority of their income from buy-to-let, but in any case for 57 per cent the priority is not living the high life now but saving for the future, with retirement and paying their children's university fees the main priorities.

BTL future ‘bright’

Last week property firm Zone 4 told 999 Today the long-term future for buy-to-let was bright, whatever the current credit crunch-affected circumstances.

Reasons postulated for this were the projected population growth of the UK - up to 70 million by 2031 - and the inability through slow planning regulations and lack of useful land of the country to build enough homes to keep pace. This in turn would result in the generation of extra demand for rental property.

Such an analysis, of course, is based precisely on thinking about what the long-term trends may be. But thinking long-term, it would appear, is already deeply ingrained in the buy-to-let culture.

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