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Thursday, August 21, 2014

Oversupply could be a threat to landlords

It's a great thing that buy-to-let is booming and despite the downturn there are now more landlords than ever.  A reputed 1.4 million of us.

Downside of increased supply of rental property

However, there is a downside.  Despite the rise of 'Generation Rent' and the fact there is clearly a growing demand for rental accommodation, particularly for longer term properties for rent.  There is also more properties to rent.  More supply means that for many landlords there are increasing risks of rental voids.  I've recently experienced this.  A 2 bed flat that has always let well has been struggling to find a new tenant.  To a degree this relates to local factors.  There has been a considerable increase in availability in apartments in the area.  But this is not exclusive to where my buy-to-let property is found.  It has also happened in many places in the UK.

Finance is key

The increase in availability of buy-to-let finance means that buying a property to rent out is more attainable than ever before.  With returns on other types of investments such as deposit accounts being at a record low levels newbie landlords are buying property and prepared to accept lower returns.  This opportunity also poses a threat to existing landlords which we need to be aware of.
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