Finding suitable residential properties for investment purposes over the last 4 years has not been easy. The main problem has been the high deposit requirements fom many of the lenders during this period.
There have certainly been good properties around at reasonable prices but the high cash input requirements have pushed the 'net returns on cash invested' down to typically 3.5 - 5.5%.
However the global economic turmoil we are currently witnessing has had a potentially positive effect on the buy to let market. The reduction in the U.S. Credit Rating, the various ongoing problems with the Euro, and the tough stance on spending by the U.K. government have all lead the Bank of England to indicate recently that the base rate is going to sit at 0.5% for some time yet, possibly even until 2014. The global bad news has also caused uncertainty in the share markets and the old favourites of gold and bricks/mortar in troubled times have been buoyed.
All of this has meant that the banks have been able to lower their risk margins when calculating their mortgage product offerings with some attractive deals now coming to the market.
The RBS, Northen Rock and Skipton B/Soc have all released deals in the last few weeks with 70% Loan To Value (LTV) rates at interest rates of between 3.69 - 4.9%, with varying, but reasonable, arrangement fees.
This has had the effect of pushing the 'net returns on cash invested' up to much more attractive figures of between 8.0 - 11.0% due to the reduced amount of cash now needed to acquire a property than was previously the case.
We will be searching for these types of properties in the coming months and will be circulating them to our clients.
