Landlords are opting to purchase more properties because they believe this asset class will give them more control over the success of their investment.
Nearly a third of new landlords state that control over their investment was a major factor influencing their decision to invest in property. This is up on the 28% who cited it as a major influencing factor in January this year.
Unlike many other investments, landlords are in the driving seat with property, and to a large degree they can control whether a property investment is successful or not. By doing their homework properly, they can choose the location and type of property that is in demand in an area, as well as maintaining the property to a high standard so that it is easily let – thereby keeping void periods low and rental income high.
John Heron, managing director or Mortgage Trust, commented: “Five interest rate hikes in a year have left investors increasingly risk averse. When investing in stocks and shares, your only option if you don’t like the way an investment in a fund or company is performing, is to sell. With buy-to-let, landlords are in the driving seat. As financial markets become increasingly volatile, this level of control will become more attractive to investors
A further two thirds of landlords are primarily attracted to buy-to-let because they believe they will be able to achieve better returns than on other types of investment.
John Heron concluded: “Investors continue to be attracted to the private rented sector due to the attractive returns – our index indicates that yields have been stable around the 6% mark for over a year, whilst total returns on a 12 month investment stand around 11%. When gearing is taken into account, the effective yield and total return are much higher. Whilst there is uncertainty in many financial markets at the moment, it is clear that landlords believe buy-to-let remains a solid investment option.’’
