Assetz® News - Good planning for the long run

Good planning for the long run

30th June 2008 |

Those investing in property are, it seems, learning more and more that the only sensible way to do it is to buy for the long term rather than seeking a quick buck. With the latter tactic having become an untenable approach since the onset of the credit crunch, it appears to be increasingly the case that investors are looking to hold on to their properties for many years.

Evidence of this trend was revealed today in the latest survey by the Association of Residential Lettings Agents (Arla). This found that, far from landlords fleeing in their thousands, members were mostly holding onto their stock and many were looking to add to it.

Of all the landlords it polled, Arla found that just 1.3 per cent were looking to sell up, with a further 7.3 per cent considering altering their portfolios. In contrast to this, four out of ten are intent on expanding their holdings in the next 12 months.

Given that the current residential property market is not so hot, the most logical conclusion is that such buyers will be doing so in the expectation that, whatever the short-term problems of the market now or in any future dips, these will be hiatuses in the bigger story of growth, in which the overall balance of peaks and troughs will be positive.

That this is increasingly the intention of investors was made clear by the survey's finding that on average landlords hold on to their portfolios for 17.2 years, compared with 16.7 years in the previous survey.

Reflecting on this fact, Arla's head of operations Ian Potter said: "Buy-to-let landlords are confirmed as prudent investors for the long term. These investors understand the realities of the investment market they have chosen. This understanding would appear to be far greater than the understanding shown by investors in many other markets and is proving to be a bonus for the nation's housing problems."

One advantage that longer-term letting may also offer is that it gives a landlord scope to make investments in the property itself that he or she can benefit from in rental terms over the longer run, by being better able to attract tenants. Advising on this, the Residential Landlords Association (RLA) suggested the type of person who is in the target market should determine how a property is fitted out.

RLA director Alan Ward stated that understanding that "different markets have different requirements" means students should have washing machines but not necessarily tumble dryers, which are expensive to run, while busy professionals should have dishwashers and multiple-occupancy homes need to be equipped with more than one bathroom.

Similar advice has come from the National Landlords Association, with head of communications Simon Gordon stating that: "Landlords can make their properties more attractive to tenants without spending a small fortune. Little changes, such as giving the walls a fresh coat of paint, can make a big difference."

However, he warned, some moves could be inappropriate if they do not meet the desires of the target market, with IT connections being a good idea for professionals in London but not necessarily important elsewhere and with different tenants.

So while long termism is one sensible way to plan ahead, it seems that for landlords to be successful throughout that time they need to be in touch with exactly what their market is looking for.