Examining the Viability of Buy To Let Investments
Welcome to buying-to-let.org.uk. I started this site in late 2011 to examine the viability of buy to let investments in the UK post financial crisis.
For investors these days, buy to let mortgages aren't the investments they once were in the times of rocketing house prices and runaway lending; and with stagnant if not falling house prices, tough restrictions on lending and rising unemployment causing more and more tenants to fall behind on their rent, many are now questioning whether buying a property to rent out is even a wise investment at all.
Nevertheless, despite all these obstacles to buy to let, there are few, if any, other investment opportunities open to ordinary people that allow them to buy what is essentially a revenue generating asset using bank credit, and then use the revenue generated by that asset to pay back the loan for the asset it's self. Can you imagine for example, a situation where it was possible to borrow large amounts of money from a bank to buy shares and those shares providing enough returns in the form of dividend payments to enable the investor to pay back the loan for the shares over 25 years? This simply doesn't happen. No other investment opportunity in reach of so many (that I know of) provides this.
Since the financial crisis of 2008, buy to let has also come under much criticism for a number of different reasons; buy to let investors are blamed by many for driving up property prices and creating the housing bubble which has lead to calls from some to stop small time speculators entering the buy to let market. Vince Cable the Lib Dem minister in the Lib/Con coalition government even described buy to let as 'lie to bet' when he was the Liberal Democrat shadow chancellor. And many people are painfully aware that property speculation is not a productive industry and complain that rising property prices have merely transferred wealth from the younger generation to the older generations. These people also argue (and I tend to agree with them) that rampant speculation, the previous Labour government deliberately creating a serious shortage of social housing, and the difficulties local authorities create for those wishing to build new homes have caused the price of property to be far higher than it needs to be, far higher than the actual cost of building it.
On balance, artificially high house prices and rents are probably bad for the economy as once a house is built it generates no more wealth, but if the rent or mortgage payable on it is consuming a large percentage of the owner or tenant's income then that money cannot be spent in the wider economy and boost industries that are actually productive - high rents don't create wealth, high rents simply transfer money from tenants to landlords and from landlords to bankers, as they say, the rich get richer and the poor get poorer.
In the articles on this website, I intend to look at all of these issues and many more to try and create a true picture of buy to let investments in the UK for those that are interested.
Thanks for visiting, David.
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