Talk of a doomsday scenario in buy-to-let is not supported by the facts.
Given the (perhaps deliberate) misreporting around Bank of England governor Mark Carney’s pre-Brexit presentation to the Cabinet, with the suggestion he is anticipating a 30 per cent drop in house prices, it has been unsurprising to see an increasing number of commentators speak out about the pros and cons of property investment.
Needless to say, much of this is coming from sources that are stock market stakeholders, with the conclusion being ‘invest in the stock market instead’, and the ‘facts’ fitted around that ‘advice’.
Well, that doomsday scenario of a 30 per cent drop was just that – a modelling and stress-testing of such an outcome, rather than a prediction.
When it comes to investing, there is much to be said for having a balanced portfolio, a point many of the anti-BTL articles tend to forget. Arguments around putting all your eggs in one basket are very sound, but they apply as much to other investment opportunities as they do to property.
While many professional landlords are property heavy, most will be fully aware that other asset classes exist, that they should be considered and that a nicely weighted range of investments is the correct strategy to take.
Clearly, the cost of investing in property is significant, but so are the opportunities.
There is much to be said for owning an asset that is in demand, can deliver a regular income and can also benefit from capital appreciation in the long term.
Some commentators seem to think that, just because house prices are not seeing double-digit annual growth, the investment is not worthwhile.
However, rental and capital yield can combine to produce a very healthy return – one that, handled correctly, can deliver year after year.
Advisers and clients should not be frightened by these BTL scare stories.
Bob Young is chief executive officer of Fleet Mortgages
