Snapping up property as quickly as possible has become a number one trademark of buy-to-let investors and a report into landlord behaviour commissioned by John Charcol* reveals that investors don’t hesitate when it comes to purchasing decisions, with 38 per cent making an offer on the last property they purchased within a few hours of viewing. Half of those (19 per cent) actually made an offer while they were viewing the property and a bold 4 per cent offered without ever even seeing the property.
Since the official arrival of buy-to-let mortgages ten years ago, when the market was dominated by professional investors, more and more people have jumped on board the rental train, to try their hand at property investment. When asked about their first buy-to-let property, 57 per cent of the landlords surveyed said that they specifically purchased a property to rent, 21 per cent decided to try their hand at renting rather than sell a property they already owned. Another 9 per cent inherited a property that they then decided to let out instead of selling.
Ray Boulger, senior technical manager at John Charcol, commented: “In a competitive marketplace, the speed at which landlords are prepared and able to make decisions means that residential buyers – particularly first-time buyers who are often competing for the most popular properties for landlords - have to work harder than ever to ensure that they have done their research properly and are able to move as quickly as those who are intending to rent a property out.”
The John Charcol report revealed that location is still a key decision maker for buy-to-let investors with 84 per cent citing this as being the factor most imperative for success. This feeds through into the fact that the majority of landlords also tend to keep all their investments in one region; for 56 per cent this means within ten miles of their home and for another 20 per cent within 50 miles.
Boulger said: “For any property buyer, location is a crucial factor as it dictates both value, rentability and saleability. For most landlords this not only means considering tenants’ expectations in terms of proximity to local amenities and transport links but also sticking to what they know best – the local market - and then buying close to home. Having rental properties near your home can be practical as being on hand to manage their properties could mean cutting costs on managing agents.”
When asked about their predictions for the ‘hottest properties’ over the next five years, 24 per cent said that family homes will be sound investment. The new government licence requirements for houses in multiple occupancy (HMO) appear to be driving some landlords away from HMO properties, typically student digs, and towards family houses.
And while the majority (60 per cent) of landlords still believe that flats for young professionals will be the best investment over the next five years, there are concerns that this could lead to over saturation in local markets as has already been seen in some developments. Only one in ten believes that studio flats are worth investing in over the next five years.
Boulger concluded: “Studio flats continue to be the least popular rental property, whereas flats for young professionals look set to remain a favourite among buy-to-let investors. However, landlords are becoming increasingly interested in properties that are suitable to rent to families. In our experience, some families are selling their homes before completing on a new property and so this, along with international families coming to the UK, will have contributed to this demand.”
