Obelisk® International reports on UK Buy-to-Let Market
UK buy-to-let property investors face worrying times after property reports reveal that private investors may not be profiting from tenants rental payments.
Within recent years, the buy-to-let market has given UK property investors consistently high value incomes. However, recent reports show that rental returns have fallen sharply in relation to the cost of an average buy-to-let mortgage affecting an estimated 400,000 UK property investors.
The figures show that rental returns from most properties have fallen below the cost of the average buy-to-let loan. This is now causing major issues within a sector that has previously surged ahead, providing an invaluable income for the buy-to-let private investor.
The research carried out by the Association of Residential Letting Agents, who represent buy-to-let mortgage lenders, state that 67% of all UK landlords were only making rental returns of 5% or below in the month of August. Many buy-to-let mortgage products also charge high arrangement fees, which also impact the potential returns.
The current Top 10 buy-to-let mortgages listed on MoneyFacts, a financial research website, show that at present the interest percentages range from 5.09% - 5.84%, thus if a return of only 5% is realised the whole concept of property investment in the UK is deemed very unprofitable.
Kevin Prior, Investment Director at Obelisk comments, ‘If an investor took out an 85% mortgage on a three-bed house, valued at £125,000, and attracting a rental income of £500 a month, the mortgage payments would add up to around £486 making the property investor a total profit of £14.’
‘After management costs such as fees, VAT, insurance, property maintenance etc. are taken into account the landlord would without a doubt lose money. However, this may not affect the investor who has held a property on a long-term basis as they have built equity and therefore profit from the boom years’
This property news will not be comforting to the 171,000 residential property investors who took out loans within the first half of this year. The drop in yield has prompted many landlords to sell up in a bid to ease exposure to losses.
Tim Warrington, of Landlord.co.uk, comments: ‘Too many landlords selling in the UK could send the property market into freefall.’ Ed Stansfield, of Capital Economics, is predicting house prices in 2008 will show, in real terms no level of growth at all with a fall in prices.
Kevin Prior concludes: ‘The key to any successful investment is diversification and putting the proverbial eggs in one basket, does not allow for any leverage. The overseas property market without a doubt offers highly competitive prices, excellent value mortgage products and most importantly an outstanding profit potential.’
For more information on Overseas Property Investment opportunities and to find out about Obelisk’s latest projects, contact: Obelisk on 0808 1600670 or email info@obeliskinternational.com
Or visit our website: http://www.obeliskinternational.com/
Within recent years, the buy-to-let market has given UK property investors consistently high value incomes. However, recent reports show that rental returns have fallen sharply in relation to the cost of an average buy-to-let mortgage affecting an estimated 400,000 UK property investors.
The figures show that rental returns from most properties have fallen below the cost of the average buy-to-let loan. This is now causing major issues within a sector that has previously surged ahead, providing an invaluable income for the buy-to-let private investor.
The research carried out by the Association of Residential Letting Agents, who represent buy-to-let mortgage lenders, state that 67% of all UK landlords were only making rental returns of 5% or below in the month of August. Many buy-to-let mortgage products also charge high arrangement fees, which also impact the potential returns.
The current Top 10 buy-to-let mortgages listed on MoneyFacts, a financial research website, show that at present the interest percentages range from 5.09% - 5.84%, thus if a return of only 5% is realised the whole concept of property investment in the UK is deemed very unprofitable.
Kevin Prior, Investment Director at Obelisk comments, ‘If an investor took out an 85% mortgage on a three-bed house, valued at £125,000, and attracting a rental income of £500 a month, the mortgage payments would add up to around £486 making the property investor a total profit of £14.’
‘After management costs such as fees, VAT, insurance, property maintenance etc. are taken into account the landlord would without a doubt lose money. However, this may not affect the investor who has held a property on a long-term basis as they have built equity and therefore profit from the boom years’
This property news will not be comforting to the 171,000 residential property investors who took out loans within the first half of this year. The drop in yield has prompted many landlords to sell up in a bid to ease exposure to losses.
Tim Warrington, of Landlord.co.uk, comments: ‘Too many landlords selling in the UK could send the property market into freefall.’ Ed Stansfield, of Capital Economics, is predicting house prices in 2008 will show, in real terms no level of growth at all with a fall in prices.
Kevin Prior concludes: ‘The key to any successful investment is diversification and putting the proverbial eggs in one basket, does not allow for any leverage. The overseas property market without a doubt offers highly competitive prices, excellent value mortgage products and most importantly an outstanding profit potential.’
For more information on Overseas Property Investment opportunities and to find out about Obelisk’s latest projects, contact: Obelisk on 0808 1600670 or email info@obeliskinternational.com
Or visit our website: http://www.obeliskinternational.com/
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