Unlike other less responsible landlord websites we are not actively promoting schemes and ways landlords can buy property and only put down £5k or £10k. Why?
Because the latest projections for house prices by HBOS are that house prices are to fall 9% this year.
Access professional rates of buy-to-let insurance
“We expect the UK economy to slow further in 2008, with a modest rise in unemployment and low interest rates, accepting that inflationary pressures will restrict the MPC's ability to reduce base rates below current levels. We now expect house prices to fall by up to 9% in 2008,” said the group, having mentioned in April that it expects only “a mid single digit percentage decline.”
LOSS of 200% in 1st year
This means on a £100,000 residential investment property a 1st time landlord who scrimped and saved to put £4500 down could be facing a £9,000 loss at the end of their fist year. This is a massive 200% of their initial stake.
Deleveraging
All this is going on at the same time that the only game in town is deleveraging. This is where the banks and companies are frantically restructuring their balance sheets to reduce the amount of debt they are carrying. Landlords should be doing the same. How? By opting for a repayment mortgage where possible and ensuring they are getting a competitive long-term interest rate on their buy-to-let mortgage.
Landlords - 5 leading buy-to-let brokers - 1 SIMPLE FORM
Building a cashpile
Landlords who do have considerable equity in their buy-to-let portfolio should be looking at building a cashpile ready to strike when the right bargain comes along.
Remember after a decade of rampant credit growth the only sensible game in town right now is deleveraging.
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