Wednesday, 13 December 2017

Survey reveals top investor priorities

A STABLE income and a boost to insufficient pension provision are the two top priorities of buy-to-let investors wishing to

A STABLE income and a boost to insufficient pension provision are the two top priorities of buy-to-let investors wishing to make a new investment over the next 12 months, reveals Assetz in its annual Buy-to-Let Investor Survey.

Confidence in the UK buy-to-let market is robust, with three-quarters of investors stating that they intend to buy additional investment properties over the coming year as low bank saving rates and poor returns on the stock market limit income.

Only five per cent felt that now is not a good time to invest in residential property, the main reasons being the belief that prices have further to fall, difficulties in securing mortgage finance and, thirdly, concerns over the financial security of tenants.

Investors are taking a long-term view, with 65 per cent stating that rental income for retirement is their main motivation, followed by long-term capital growth (27 per cent).

Just eight per cent cited short-term capital growth as their reason for investing.

A large proportion are buying either outright with cash or with a very small mortgage, meaning they are not facing the usual hurdle of securing finance, faced by homebuyers.

More than half (55 per cent) stated they will be using a low loan-to-value mortgage or buying outright, with 23 per cent refinancing their home or an existing buy-to-let and 22 per cent using a high LTV loan.

Most of those surveyed (68 per cent) said they are currently achieving gross rental yields of more than six per cent with almost a fifth achieving nine per cent yields or higher.

Stuart Law, chief executive of Assetz, commented on the research: “Investors are very sensibly thinking long term with their main goal being to supplement their retirement incomes as annuity rates remain at rock bottom and pension income projections are cut.

“Those with a lump sum from savings, redundancy or inheritance are looking at what it will pay out in an annuity and seeking alternative options.

“Many people feel they are familiar with the property market and have faith in its long-term growth and stability.

“Finance is still relatively hard to come by and lenders would rather allocate the limited funds they do have to the lower-risk option of buy-to-let borrowers with large deposits and good repayment histories.

“The fact that interest rates have remained extremely low has protected landlords by giving them cashflow and future rate rises, which are likely to be small and gradual, are likely to be covered largely by rental increases.”

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