Monday, 07 January 2008

• Purchase at an Investment Property Sale

                The number of repossessions in the UK has been on the increase in 2007, and that is not really surprising as rising interest rates have forced monthly mortgage repayments up, and home ownership for the average UK household has become harder.
  
  However sad this may be, it does give an opportunity to buyers to pick up cut-price homes at an investment property sale such as an auction. Auction houses are benefiting as the number of homes being sold at auction that have been repossessed has risen by almost a third in the last three months, according to figures from the Royal Institution of Chartered Surveyors (RICS). Forecasts say that the number will rise even higher in 2008, with some 45,000 repossessions on the cards.
  
  Investment property sales at auctions moved over 5,100 homes in the second quarter of 2007 – the highest number for more than two years. The North West and Merseyside were the hardest hit areas, as repossessions went up by 60% on 2006.
  
  For potential buyers auctions can provide a rising number of investment property sales such as these in the next 12 months or so, and investors can benefit with purchases of potential buy-to-let properties.
  
  With the property market in its current state, heading for stagnation, and with mortgage repayments and the cost of credit on the increase, there should be opportunities for investment property sale bargains for the shrewd investor in the coming months. First-time buyers are finding it harder than ever to afford to make the first step on the property ladder, so more and more are looking to rent while they sort out their finances. As they don’t buy and do rent, there will be more potential tenants for the buy-to-let landlord.
  
  New buy-to-let investors have to make sure that their own finances will be properly managed before they take themselves off to an investment property sale, but for long-term buy-to-let investors, the fact that rental growth is reaching record levels is good news. The number of potential tenants has increased as more people are living alone, and immigrants continue to flow into the UK. Other data suggests that tenants are remaining in properties longer, and landlords are suffering shorter void periods than before.
  
  A RICS survey reports that 29% more surveyors saw a rise in tenant lettings than those that saw a fall. This figure was only 15% last quarter. Would-be home buyers are having to stay in the rental sector as they wait and see what happens next in the housing market, and with mortgages and the wider economy.
  
  Investment property sales have picked up as new landlord instructions increased sharply in quarter two. Surveyors reporting a rise in landlord instructions were 20% higher than those seeing a fall – it was 8% in the previous quarter, and this is the first time the figure has gone above the long term average (currently 16%) in well over a year.
  
  For those considering making a purchase at an investment property sale, the news is that surveyors expect rental levels to reach record growth rates in the next few months. Expectations are for a surge the growth for rents for flats as first-time buyers sit tight before making their own purchases.
  
  Jeremy Leaf, of RICS, said: “Current economic uncertainty has created an ideal platform for buy-to-let investors to cash in on rising rental levels. Many would-be buyers have decided to wait and see how the interest rate cycle will affect the market. Rising rents are offering some compensation for landlords that are experiencing higher borrowing costs, although buy-to-let investment will struggle for funding in 2008 as lenders become more discriminating, especially for ‘sub prime’ properties.”
  

  • 11:29 PM
  • 52 Views
  • 4 eProps
  • 2 Comments
  • email