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Buy-to-let investors are getting fussy about who they let their property to, seemingly concerned about the risk of tenants not paying them their already dwindling return. Background checks on tenants, at the behest of the investor, are said to now include proof of income; bonus payments, personal investments, net worth and job security. Although so far isolated to the high end of the lettings market, the rigorous checks are a result, partly, of an issue for all investors – oversupply is downgrading their yield. In other words, the monthly return for investors is reducing, making them determined that their smaller reward is not cut any further by rent defaults or void periods. Figures in the Financial Times from estate agent Knight Frank show rents in central London fell 1.9% in the second quarter, while values in the area actually rose 3.7%. Moreover, the Royal Institute of Chartered Surveyors told the paper that investors feeling the pinch, mainly due to an excess of rented property, was not confined to the capital. “Yields have been falling across the board,” said Simon Robinson, RICS chief economist. “In the first part of the year, 10% more surveyors thought rents were going up rather than down but in the second quarter, that number went negative. More are now seeing rents go down.” Landlords were advised to be realistic about their returns, particularly given that the number whose properties are being repossessed indicates a growing number are holding out too long for a premium. Figures in the Independent from The Council of Mortgage Lenders show that 1,700 buy-to-let properties were repossessed in the first quarter of 2009, compared with just 900 in the first quarter of last year. Landlords concerned about covering their mortgage repayments were advised to talk to their lenders immediately, as many offer repayment holidays, sometimes lasting a few months, during which finance can be organised. Jul 6, 2009 Email this article Printer friendly page Previous Page
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