Readers of previous blogs will know of my interest in property investment and the buy to let market. There has recently been a report from ARLA indicating that tenant demand is at its highest level ever throughout the UK with landlords reporting rental voids at a new low-level. This surge has been caused by ever-increasing student numbers, a lack of opportunity for first time buyers and the ever-present shortfall of houses in the UK.
With current housing prices at comparatively low levels and tenant demand being so high there has never been a better time to invest in property and in Dundee in particular. Past experiences tell us, however, that it is important before you embark upon this type of venture to take the correct advice from a property specialist, and with recent proposals to further regulate the relationship between landlord and tenant it is now very important to take legal advice in terms of preparing the Tenancy Agreement.
P.S. For your interest I have been recently involved in discussions in respect of the possibility of creating a ‘property investment trust’ which I think is a very interesting development and I will let you know when more details become available.
Head of Property Services
In 2003 a newspaper carried the headline that Dundee was the property investment capital of Western Europe. Low entry prices, strong demand from tenants, good gross rental yields compared to price all contributed. This trend continued but as prices carried on their rise and rent stayed the same, yields dropped and with the credit crunch in 2008 the picture became somewhat different.
Well what about now?
There is still a lack of mortgage funds available for the buy to let investor with 60% to 70% loan to value becoming the max and stringent rent to interest coverage usually between 120% and 140%. However, in the last couple of weeks I have noticed an increase in property investors coming back to the market. Lower prices tied in with a very strong tenant demand have caused rents and rental yields to purchase price to increase – lack of mortgage funds available to the first time buyer can be attributed to this situation as they struggle to climb on the property ladder. This along with the attraction of potential Capital Gains in the short to medium term has got the sophisticated investor back looking at property.
In times of low interest returns on savings, a secure investment that can be liquidated is a good way to grow your savings with minimal risk – provided you take the right advice.
Whilst I think it is too early to expect returns of the headlines that we saw in 2003, I certainly think that as the economy recovers there will be a growth of property investors coming into the market.