A&L report indicates buy-to-let optimism for 2008

According to a recent report by Alliance and Leicester the majority of buy-to-let landlords are actually optimistic about their prospects in 2008, despite the recent slowdown in the property market in the wake of the credit crunch.

The report found that 77 per cent of landlords claim to be making a profit from their investments in the buy-to-let market and that there is a particular air of positivity in central London where landlords expect rental yields to be up to four times higher than that of buy-to-let properties in the rest of the South East.

There is an expectation amongst landlords that Scottish properties will see a 5 per cent increase although there is less optimism about Wales where landlords predict a 1 per cent increase in yields, the lowest in the country.

Jeremy Claridge, head of specialist mortgages at A&L commented on the report’s findings: “It is encouraging that buy-to-let landlords indicate they are feeling buoyant about the outlook for 2008. Regardless of a tough financial year, it is clear the buy-to-let property market is still healthy for longstanding landlords, especially for those in the South East of the country.”

So, perhaps unsurprisingly London emerges as the market with the brightest outlook for 2008 although there were also encouraging signs for the buy to-rent markets in Scotland and the North of England.

The survey also reveals an interesting if somewhat predictable disparity between “professional” landlords with extensive portfolios and landlords with just one buy-to-rent property. Across the country it appears to be the professional landlords who are most confident in the financial security of their investments. Amongst professional landlords who own more than 20 properties 49 per cent said that they made enough from their property portfolio to supplement their savings and a further 40 per cent were successful enough to consider their buy-to-let investments as their main source of income.

On the other hand a meager 15 per cent of landlords with just one property managed to save any of their earnings from that investment. No surprise then that whereas a massive 92 per cent of professional landlords claimed to be confident or very optimistic about their prospects in the coming year a significantly smaller 56 per cent of landlords with one property felt certain enough of their prospects to say the same.

Overall however Jeremy Claridge considered the outlook to be positive for the buy-to-let market albeit with the proviso that those entering the market with a single property need to be careful:”The long term view is positive house price inflation will yield a positive return over the investment period. Smaller landlords should continue to carefully consider the economics of any investment and ensure that they plan to deal with extended void or less profitable periods.”

Visit Alliance-Leicester.co.uk for more information on their bank accounts and savings.