Lettings group: Buy to let regulation will filter out unscrupulous advisers

Tuesday 19th January 2010

Stating its predictions for the upcoming year, LSL Property Services, which owns the UK’s largest lettings agent network, has said that the proposed introduction of buy to let regulation will be positive for the sector.

David Brown, commercial director of LSL Property Services, commented: “2010 is likely to be an interesting year for the buy-to-let market. The proposed introduction of regulation should help filter out unscrupulous mortgage advisers, which will be positive for the sector, particularly for inexperienced landlords.”

The firm also revealed that landlords enjoyed a 7.6% annual return on their investments by the end of December 2009, according to its latest Buy to Let Index

The value of landlords’ properties rose 3% in the year while rental income after void periods added a further 4.6%. This means in 2009, a typical landlord made a return of £12,740, which was a combination of modest capital gains of £4,831 on each property and £7,909 in rental income.

By contrast, in 2008, a typical landlord would have lost 8.8% even after allowing for rental income. They lost £23,000 in capital as the property fell in value, and earned £7,900 in rent for the full year, leading to a total loss of £15,100.

Mr Brown continued: “Despite the worst recession in living memory, and despite house prices continuing to fall for the first few months of 2009, investment returns in buy to let were very respectable. The £12,700 the average landlord made on a rented property during the year recouped most of the losses in the housing crash of 2008. Brave landlords who added to their portfolios will be celebrating an excellent year.”

The firm predicts that 2010 is set for stronger returns than 2009, if house prices continue to rise at the current modest rate of 0.4% per month – equivalent to 4.9% for the full year – a typical landlord will make a total return of £16,000 in 2010, equivalent to 9.8%.

“Buy-to-let is an essential part of our housing market – we need well capitalised, experienced, professional landlords. With returns rising, they can once again look forward to investing more in the sector to meet our housing needs.” Mr Brown concluded.