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A worrying message on buy-to-let sector

Bob Young
Bob Young Managing Director Capital Home Loans

Is buy-to-let the key to easy riches again? This was a headline The Telegraph had recently. Regardless of the article’s content, which was a fair appraisal of buy-to-let, it is this type of headline we should avoid.

The answer of course is no it is not, but to suggest that it may be is a dangerous path to embark on.

Of course, you might rightly suggest that anyone looking at becoming a landlord will soon find easy riches are not obtainable.

Prospective landlords need sizeable riches of their own because of increased deposit requirements, product fees and the other costs that come with renting out property.
Most newcomers underestimate expenditure and overestimate income with potentially devastating consequences.

But we should not underestimate the power of headlines that suggest buy-to-let is moving towards its pre-credit crunch status. The last thing we should do is give the impression that the market is open to all and consumers should take a punt. Look where this attitude got us last time.

Buy-to-let is a market for professionals and specialists. Of course, people will still want to enter it as it remains a commercially viable, long-term investment strategy.

But this is not a market for getting rich quick and it is up to the advisory sector to spell out the facts and that ensure prospective landlords have done their homework before entering it.

Those peddling a different message should be treated with caution.

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Comments
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  • Simon Davies 15th December 2010 at 12:51 pm

    Absolutely spot on. BTL is for the informed and professional investor who is in it for the long haul and is knowledgeable of the risks.

  • John Chedozie 15th December 2010 at 10:49 am

    Very wise words indeed. If Mr Young had been at the helm of one or two BTL “specialists” 5 years ago they may not be where they are now – out of business.