Why landlords should be optimistic about the current buy-to-let market

With the summer peak renting season upon us, it is useful to reiterate the underlying strengths of the buy-to-let market in London, and why it is a strong long-term investment for both current and prospective landlords.

We have discussed elsewhere in this month’s newsletter that recent discussion and tilted commentary of the Government changes to buy-to-let have often ignored the positive long-term trends that work in landlords’ favours.

Read here where we discuss how current increasing competition in the buy-to-let mortgage arena is already benefiting landlords by offering increasingly lower rates.

Some of the other key reasons to remain optimistic about the buy-to-let market in London are clear to see -

• High tenant demand: added to an ever increasing population, especially in the capital

• Rising rent prices: while rents may have taken a bit of a dip recently, over the long-term for serious, professional landlords they offer consistent returns and a good hedge against inflation

• Diverse investment options: with no one uniform style of property, landlords can diversify their portfolio across a wide range of options, from studio apartments to detached houses and across different boroughs in London taking advantage of regeneration and new transport facilities

• Long-term returns: property consistently offers continued house price growth

• Steady income stream: Property provides landlords with a steady stream of money coming in, meaning that landlords benefit from not only overall capital growth, but also a regular income from the property. Buy-to-let consistently produces yields of 3.5% to 4% - outstripping inflation (currently at 2.6%) - and outperforms other assets on a risk adjusted return basis over 16 years, meaning it is potentially a less volatile investment

Stephen Ludlow, Chairman at ludlowthompson, comments: “There continues to be a fundamental mismatch between supply and demand.”

“Long-term completions of new build property do not satisfy first-time-buyer demand, meaning an extension of the time that ‘Generation Rent’ stays in rental accommodation. All of these developments mean continued positive, long-term trends for Landlords.