New build is worst buy-to-let investment, experts warn
By Emma Thelwell
Last Updated: 5:39pm BST 08/05/2007
# Why are the banks so laissez-faire with buy-to-letters?
# Is buy-to-let primed for a fall?
New build property is the worst buy-to-let investment in the current financial climate, industry experts have warned.
The glut of new-build apartments erected in UK cities, in particular Leeds and Cardiff, against a backdrop of rising interest rates, could see rental yields falling behind some landlords' expectations.
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A survey by online property group Lettingagent.com revealed that London's landlords reap an average of £730 a month for a studio, and as much as £2,410 a month for a luxury apartment.
However, landlords in Leeds get the least bang for their rental buck, with studio apartments yielding 81pc less than they do in London, at £404 a month.
Luxury flats in Leeds command a fraction of their London counterparts, charging an average of £694 rent a month.
AtW's comment: don't know about other cities but they got it wrong for Brum - I pay 600 per month for 4 bedroom house in a nice leafy place near city center - to say 1 bedroom flat rents out for more is bullcrap. As for London rents - you gotto to be sadguru to accept them 
In recent years, new builds in inner city areas have been driven by demand from young tenants. While this has revived many inner city property markets, it has also widened consumer choice, which in turn has driven down rental yields.
Lee Grandin, managing director of Lettingagent.com, said: "For young tenants, the cost of living is set to rise further - those looking to rent a one bedroom flat three or four years ago would be lucky to get a studio flat now."
He said that in general demand would stay "relatively high" in the lettings market, due to the current shortage of property across the UK.
However, Mr Grandin criticised "irresponsible lenders" for granting young landlords large buy-to-let mortgages that could become unmanageable if interest rates go up.
He said: "With interest rates due to rise, novice investors would be foolish to enter the new build market with a buy-to-let mortgage now. Some buy-to-let landlords will be forced to sell after the rate rise because they can't make the figures stack up."
A second home is often the first asset to be sold in the event of financial strife, and Thursday's widely expected interest rate change promises to squeeze Britain's indebted population even further.
Still, the buy-to-let market continued to grow in March, according to data from Hamptons Mortgages, with a rise of 6pc year-on-year.
Hamptons said there are now more than 70 lenders competing for a share of the buy-to-let mortgage market. Jonathan Cornell, of Hamptons Mortgages, said: “Buy-to-let has increased in popularity during recent years, with just over 1,000 outstanding mortgages in 2001 reaching in excess of 800,000 in 2006.”
Despite the growing market, Hamptons said it is only recently that lenders have tailored their mortgage offerings to target these buyers. Buy-to-let investors are now seen as less of a risk than today’s troubled first-time buyers.
Evidence of the pressure on first-time buyers came today in a separate report from the Council of Mortgage Lenders. Already an endangered species, first-time buyers are choking under interest rate rises, the CML warned.
A report by the CML revealed that first-time homeowners spend an average of 18.3pc on their mortgage interest payments, the highest figure since 1991. The number of potential first-time buyers getting their foot on the housing ladder has also fallen by 8pc, on a year-on-year basis.
The CML said: “The increasing costs of home-ownership are clearly deterring many potential first-time buyers.” The data also showed that first-time buyers are trying to protect themselves from future increases in interest rates.
The survey revealed that 88pc of first-time buyers - the highest proportion ever - chose a fixed-rate product. Fixed-rate mortgages remain the most popular mortgage product in March, accounting for a record 78pc of all loans, up from 75pc in February.
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Source: here
Btw, notice that jsessionid= bit in the URL? Whoever at Suns' Java design team had that idea should be put to the wall and shot using frozen turkeys shot out of railgun.
By Emma Thelwell
Last Updated: 5:39pm BST 08/05/2007
# Why are the banks so laissez-faire with buy-to-letters?
# Is buy-to-let primed for a fall?
New build property is the worst buy-to-let investment in the current financial climate, industry experts have warned.
The glut of new-build apartments erected in UK cities, in particular Leeds and Cardiff, against a backdrop of rising interest rates, could see rental yields falling behind some landlords' expectations.
advertisement
A survey by online property group Lettingagent.com revealed that London's landlords reap an average of £730 a month for a studio, and as much as £2,410 a month for a luxury apartment.
However, landlords in Leeds get the least bang for their rental buck, with studio apartments yielding 81pc less than they do in London, at £404 a month.
Luxury flats in Leeds command a fraction of their London counterparts, charging an average of £694 rent a month.
Code:
Studio (£pcm) One Bedroom Flat (£pcm) Luxury Apartment (£pcm) London 730 1,470 2,410 Birmingham 470 624.6 1,235 Manchester 489 536 1,125 Liverpool 511 591 945 Edinburgh 451 568 890 Cardiff 419 504 708 Leeds 404 507 694
In recent years, new builds in inner city areas have been driven by demand from young tenants. While this has revived many inner city property markets, it has also widened consumer choice, which in turn has driven down rental yields.
Lee Grandin, managing director of Lettingagent.com, said: "For young tenants, the cost of living is set to rise further - those looking to rent a one bedroom flat three or four years ago would be lucky to get a studio flat now."
He said that in general demand would stay "relatively high" in the lettings market, due to the current shortage of property across the UK.
However, Mr Grandin criticised "irresponsible lenders" for granting young landlords large buy-to-let mortgages that could become unmanageable if interest rates go up.
He said: "With interest rates due to rise, novice investors would be foolish to enter the new build market with a buy-to-let mortgage now. Some buy-to-let landlords will be forced to sell after the rate rise because they can't make the figures stack up."
A second home is often the first asset to be sold in the event of financial strife, and Thursday's widely expected interest rate change promises to squeeze Britain's indebted population even further.
Still, the buy-to-let market continued to grow in March, according to data from Hamptons Mortgages, with a rise of 6pc year-on-year.
Hamptons said there are now more than 70 lenders competing for a share of the buy-to-let mortgage market. Jonathan Cornell, of Hamptons Mortgages, said: “Buy-to-let has increased in popularity during recent years, with just over 1,000 outstanding mortgages in 2001 reaching in excess of 800,000 in 2006.”
Despite the growing market, Hamptons said it is only recently that lenders have tailored their mortgage offerings to target these buyers. Buy-to-let investors are now seen as less of a risk than today’s troubled first-time buyers.
Evidence of the pressure on first-time buyers came today in a separate report from the Council of Mortgage Lenders. Already an endangered species, first-time buyers are choking under interest rate rises, the CML warned.
A report by the CML revealed that first-time homeowners spend an average of 18.3pc on their mortgage interest payments, the highest figure since 1991. The number of potential first-time buyers getting their foot on the housing ladder has also fallen by 8pc, on a year-on-year basis.
The CML said: “The increasing costs of home-ownership are clearly deterring many potential first-time buyers.” The data also showed that first-time buyers are trying to protect themselves from future increases in interest rates.
The survey revealed that 88pc of first-time buyers - the highest proportion ever - chose a fixed-rate product. Fixed-rate mortgages remain the most popular mortgage product in March, accounting for a record 78pc of all loans, up from 75pc in February.
---
Source: here
Btw, notice that jsessionid= bit in the URL? Whoever at Suns' Java design team had that idea should be put to the wall and shot using frozen turkeys shot out of railgun.
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