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Where the money is

1st August 2008 | back to article listings BACK    print this article PRINT

Anybody heading into Leeds on the train in recent years may have noticed a considerable change to the cityscape. The skyline has risen and the steel and glass of new apartments is everywhere.

The problem, of course, is that many of these are empty. Leeds has now got an oversupply of such properties, which is not good news for buy-to-let. Moreover, this form of development has followed a similar pattern in other large provincial cities such as Manchester, Birmingham and Liverpool.

Given this fact, many of those looking to buy investment property could be forgiven for wondering where the next big prospects are, given that city living was such a growth industry until recently.

Discussing this issue, Tom Entwistle, editor of buy-to-let landlord magazine Landlordzone, said: "It's certainly going to be quite difficult to buy at the moment with a mortgage and make a lot of money from buy-to-let. It's still possible, even at this stage, but you've got to be very selective with where you are buying and the types of property you're buying into as well."

This advice, he noted, was for the "highly-geared", whereas the "traditional landlords" are currently still doing well.

Nonetheless, even for those on tighter budgets it is still possible to look around and find buy-to-let mortgages with up to 85 per cent loan-to-value, Mr Entwistle stated.

But where to spend it is the key, he added. Noting the problem with the flats, he suggested an alternative: "The types of property that tend to make money are terraced properties and the older terraced type properties which you can buy a bit cheaper and make money from."

There may be obvious ways to do this, not least if a property requires a bit of renovation and will benefit from some investment, although this will, of course, require some more money to be found.

Type is one matter, but another is supply. Mr Entwistle suggested here that the sole property for sale in an area is a far better bet for finding tenants easily than one where there are many empty dwellings to be had, for the latter case obviously shows that demand is low: "If you find an area with a single property for sale and it's the right type of property then the chances are that you will let it without problems."

While this may be the case in the centre of provincial cities, London is a different kettle of fish at present. In the capital the demand has been rising rapidly in the past year. Figures from Your Move have revealed that between July 2007 and July 2008, the number of people renting in the metropolis has risen by 19 per cent. So while the type and location of properties is important, which city or town is chosen may also be a key factor for investors.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4311.html. Alternatively, please see our full press release archive.

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