Investors holding onto properties for longer

Ramesh Sharma

June 1, 2004

RICS’ quarterly lettings survey has reported a low proportion of landlords (4.1 per cent) are selling their property rather than re-letting it when tenancies come up for renewal with many seeing residential property as a long-term investment. With tenant demand at its highest since January 2004, in conjunction with rent levels increasing for the tenth consecutive quarter, investors are taking advantage of the market conditions to maximise earning potential.

Jeremy Leaf, RICS spokesperson, confirmed the market was geared towards investors looking to include properties as part of their pension plans. “The strength of the market is demonstrated by the fact there has been no significant investor exodus in the past year despite shrinking returns as house price rises stall.”

“Many buy-to-let investors are now choosing to stay in for the long haul, viewing their investment as a more significant part of their pension plan. For the time being at least this looks set to continue with public confidence in pensions at an all-time low,” he said.

Mike Pendergast, IFA at Zen Financial, agreed the buy-to-let sector had changed significantly over the past few years. He said: “A couple of years ago buy-to-let investors were in the market for a quick profit. At the moment property prices are not rising as fast as they have been so clients are taking a longer-term view. Also buy-to-let is seen as an alternative to pension funds which are considered riskier than property by some clients who were badly hit by poor fund performance in 2002 to 2003.”

Despite an increase in long-term investors the report also revealed new investors are still wary of entering the market with the cost of borrowing and the prospects of capital growth all hindering their entrance into the market.

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