Buy-to-let forecast in 2010

Like Mark Twain’s death, rumours of the demise of buy-to-let have been greatly exaggerated.

Rental demand rose in 2009 and there is no sign yet of a reversal. Restricted access to mortgage finance means would-be first-time buyers are renting.

Uncertainty over house prices means ”treading water renting is a safer option than risking negative equity”, says Barry Manners of Chard lettings agency in London. He knows shrewd investors buying ex-council flats at low prices and enjoying 13 per cent annual rental yields.

Can anything upset the applecart in 2010? The return of full stamp duty may deter some investors expanding their portfolios but the acid test will be if interest rates rise. That may force highly geared landlords to quit, causing the flood of flats on sale that some pundits expected a year ago. It may be a knife-edge market late in 2010.

Source: The Telegraph

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