Industry experts make BTL predictions for 2011

Predictions from Sarah Beeney, Upad, Keys Mortgages Ltd, The Council of Mortgage Lenders, The Mortgage Works and the British Property Federation.

Related topics:  Specialist Lending
Millie Dyson
16th December 2010
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As the majority property professionals begin to wind down on what has been a relatively subdued year, an annual survey of some of the leading experts and spokespeople largely pointed to the flat line of prices remaining (with some stating further drops). 

According to former Secret Millionaire and property entrepreneur Kevin Green:

"It’s probably fair to say that the market this year has been bouncing a lot at the bottom and next year is likely to see prices remain static.

"My suggestion to investors is to be very careful in what you buy; ensure there is good cash flow as property prices will take some time to recover and, if using any creative strategy, make sure you fully understand your short, medium and long-term obligations."

Many participants also agreed that interest rates are likely to remain low and obtaining buy to let housing credit will continue to be a challenge - particularly as a result of the recently announced government austerity measures.

James Davis – Upad:

“We’re expecting continued downward pressure on property prices due to lack of available financing – though of course this will hit some areas of the country much harder than others. Limits on LTV and product fees are prohibitive for many buyers right now and this isn’t likely to change over the next 12 months.

"Because of the slow sales market, we’re expecting to see the rise again of the “accidental landlord” – people who need to move but can’t sell their property. Fortunately for them, demand in the rental market is likely to remain exceptionally strong.

"We won’t be surprised to see rent increases of 10% or more over the next year, and in some areas potentially even more. While restricted lending is hampering many property investors, those landlords who do have access to cash are likely to see yields increase significantly.”

Sarah Beeney – Tepilo / C4’s Property Ladder

“I think at the moment we are still bouncing along the bottom of the market, and price rises shouldn’t be too dominant for some time, but also won’t fall much either. If you need to sell I would suggest you get going now or in the New Year.

"If you haven’t found a property you want to buy, then there’s no point in buying anything until it’s the right one – the cost of moving can be as much as 10% these days. Property is most definitely still selling! The most important thing to remember in this climate is to remain calm. 

"Do all you can to not take into consideration headline scaremongering of a predicted 14.7% drop in values in one newspaper one day or a 16.4% rise in another newspaper the next – why not 13.9% or 15.8% as they would be likely to be as accurate?  If you have to sell for less you can more than likely buy for less too.

"The truth is you need to keep both feet on the ground and get finance you can afford to pay off and a property that will suit your needs for the next few years. If you are selling be realistic about how much you can sell for and you will get a buyer and of course save yourself thousands of pounds by using www.tepilo.com where it’s free to sell.”

Lisa Orme (Williams) – Keys Mortgages Ltd

“I’m incredibly optimistic about the rental sector and the housing market for the next few years; in fact I’d go so far as to say there’s never been a better time to be landlord. That’s hard to swallow for some when they feel they missed the ‘easy lending and property boom of the 2000s’ but let me put my neck on the line!

"The lack of mortgage availability and liquidity in the market means more people are choosing to rent as they can’t get a mortgage or raise the deposits (10% minimum realistically), others can’t move as they’re fearful of job cuts or have lost equity in their homes creating a fairly inactive property market.

"In addition we have the same old issues of death, divorce, separation, debt and so on that put more people into the housing market as well as youngsters wanting place of their own. The latest figures show less people are leaving the UK than have done for years and a fresh wave of EU migrants are returning to the UK to take up jobs UK people won’t leading to net immigration.

"Job losses, increased financial commitments, VAT increases and inflation will add to people’s concerns for their finances and lead them to stay put, rent instead of own or force many into repossession.

"There’s a distinct lack of social housing as we know, councils have sold off much of their stock and aren’t building many more, housing associations similarly as they benefited most from taking a share of new build estates and we know who they have suffered recently. Many of these people will therefore need to rent.

"Capital Economics predicts that by 2015 1 in 5 households will live in privet rented accommodation. This will push rents up.  As prices fall further, rents increase and rates stay low for the foreseeable future cashflow and yields will go up and this will encourage lenders into the buy to let arena.

"Housing starts are at their lowest since the 1920s and again coupled with a rising population the tipping point will no doubt arise. The banking crisis will be forgotten, tenants will realise they’re better off buying than renting, the economy will be on the road to recovery and house prices will start to rise again. I estimate this will be in about 5 years and we could see an even bigger boom than the last one!

"All in all a good time to be a landlord but don’t forget the old adage prices can fall as well as rise and rents certainly can too! Have a plan b, c, d and e just in case!”

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