'Ask the Expert' Article for the regional press

Hull Daily Mail – ‘Ask the Expert’ Article Jan 20^th 2011

2011: An outlook for Buy-to-let investing in Hull and East Yorkshire.

Now that the Christmas and New Year festivities are behind us, buy-to-let investors will be turning their attention to the coming year, with some interest.  Rising demand for rental properties from frustrated first time buyers - and those facing mortgage lending restrictions - will maintain rental levels, whilst continued low interest rates have bolstered rental yields for most investors.
However, all is not rosy in the property garden. A rise in unemployment and reduction in the LHA rates due to the government spending cuts will see rent arrears mounting and some (especially younger) tenants may just decide to leave the rental market and move back in with their parents. Meanwhile, with first time buyers still struggling to save the deposit for a property, house prices (especially at the lower end of the market) could slide further, creating buying opportunities for buy-to-let investors. Assuming of course, that they can get a suitable buy-to-let mortgages and that the rental values stack. 
I read with interest recently that the Royal Institution of Chartered Surveyors (RICS) believes more landlords will be looking to add properties to their portfolios and stated “The lettings sector has become increasingly strong over the past nine months, in contrast to the housing market which continues to slow,’.  This has certainly been the sentiment amongst my landlord and investor clients, in Hull and the East Riding.   
The old adage of “location, location, location” still very much applies; however with the prospect of increased capital gains on investment property and low capital appreciation, rental yields and purchasing the property at a discount (to its market value) are now key considerations - especially for turnkey investments.
With Interest rates still at 0.5% and only the prospect of small increases in over the coming year, rental yields are still healthy and set to remain so. New buy-to-let mortgages are much more expensive - averaging 5% interest – which will have a slight impact on yields, although investors will look to offset this cost by lower purchase prices.
There is also the sense that property vendors are becoming more realistic on the value of their property when thinking of selling.  As a consequence, there will be more opportunities for buy-to-let investors to add to their portfolios. Especially from cash buyers who are seeing vendors willing to offer large discounts for a quick sale.
So what does 2011 have in store for buy-to-let investors? With the impact of the austerity measures still to be felt in the wider economy, Landlords more than ever need to be vigilant about their cash flow. Lower house prices plus restrictive mortgage lending - coupled with the underlying demographics of increasing housing demand – is only likely to increase the pressure on the private rented sector. This, at a time when the supply of new homes is at an all time low - means that the current upward pressure on rents will continue well into 2011.  Personally, I think 2011 will be a good year for property investors – watch this space.
Richard Pennack
iQ Property (Hull) Ltd
t:  01482 240148
e: info@iqpropertyhull.co.uk
www.iqpropertyhull.co.uk
Speacialising in Property letting, management and investment in Hull, Beverley and surrounding areas.  Professional, ethical and efficient. ARLA registered.