The Royal Institution of Chartered Surveyors (RICS), in its latest report, suggested that financial barriers to enter the BTL market had made property investment an ‘unattractive proposition for vast swathes of the population’.
With interest rates rising and rental yields for mortgages taking a nosedive, with some landlords reportedly being forced out of the sector, RICS claimed that would-be investors needed to put down a deposit of £65,600 – 30 per cent of a property’s value – for the average UK house in order to get a foothold on the BTL ladder, c
ompared with £10,100 – 8 per cent of a property’s value – that was required in Q1 2002. This indicated a deterioration of 500 per cent in five years.
David Stubbs, RICS senior economist, said: “Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined.
“However, existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones, and this should ensure that demand from the BTL sector does not dry up entirely.”
Lee Grandin, managing director at Landlord Mortgages said: “RICS needs to requote its rates as it is not just about investors, but professional landlords as well. Some have been in business for a few years but are still trading for the moment.”
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