A new survey carried out on behalf of The Property Investment Market (TPIM) the online property exchange, which allows investors to buy shares in a number of properties, found that 72 per cent of those questioned cited a lack of funds as the main reason for not going into buy to let. The survey also revealed that almost half of the respondents believed £10,000 was too little to invest in property.
However, Stephen Kenny, chief executive of TPIM, said: “Novice buy to let investors are losing out on their chance to capitalise on house price growth, for fear of taking on a huge financial commitment that will bring them years of hassles, potentially outweighing any gains.
“There is no need for potential investors to miss out on investing in property because of the associated risks or worries. On average TPIM investors invest around £300, which could be invested in several properties with a diverse geographical spread, thereby spreading the risk and negating the need to borrow money or find a tenant.”
The survey showed other restraints for people entering into buy to let include it being too labour intensive, finding tenants or getting rid of bad ones, the cost of maintaining a property and concerns over rising interest rates.
More than half of those questioned felt that the problems and effort involved in traditional buy to let were a major turn off. The four biggest factors highlighted were the upkeep of the property, funding unexpected problems, having void periods in lettings and bad tenants.
“Traditional buy to let has a lot of stresses involved with it, and these can be very off putting especially if you are only doing it part time rather than being a professional property investor. Void periods are a big worry for investors as no tenant means there is no one paying the mortgage and with rising borrowing costs this is an increasing expense for landlords to carry. Maintenance and funding unexpected costs are another financial burden for landlords, and where funds are already tight this might not be feasible.
“By spreading your investment across several properties in a wide area with other investors you spread the risk. We carry out all the due diligence on a property and the general running of the property is all taken care of by the management company. Shares can be bought or sold online making it a relatively liquid asset if, as with any property market, the buyers are there,” concluded Stephen Kenny.
