Articles - Buy-To-Let Market

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Let's take a realistic look at buying-to-let:

Investors purchase property for the purpose of letting it out and providing an income, as well as capital gain. With the recent property boom a resulting oversupply of rental properties has occured. Add to that the risks involved in owning a buy-to-let property, which include:

Non-payment of rentals in a no-let situation;

Reduction of rental due to a significant increase in rental properties, or due to poor condition of the property;

Unexpectedly high maintenance costs;

Increase in municipal rates;

Increased interest rates; and

Tenants who pay late or not at all.

Anyone interested in buying property to let must ensure that they make provision for the unexpected. Make sure that you allow for interest rate increases and bear in mind that you will become a landlord, with all the responsibilities that goes with it.

The Buy-to-Let Market

It's a well documented fact that property is a good investment. If you own property it's almost guaranteed to provide an income and grow in value over the long term. Another plus factor of property ownership is that property can be used as collateral to create more capital.

Whilst banks will seldom lend you 100% of the value of an asset, when it comes to ownership of property they are generally more accommodating. From a bank's point of view, property is considered a much lower risk than any other for of property, or even other assets.

What most property owners want from buy-to-let is passive income - regular income from rentals. However, that might not be as simple as you think.