UK buy to let still strong

Buy to let mortgages are a thing of the past in the UK market according to the latest rumblings from the banks, but investing in property and letting it out is still a secure move according to experts.

Buying the right property in the right area and securing long term tenants is the key according to former Independent Financial Adviser Gerry Fitzgerald and author of the book How To Invest in the UK Property Market.

He points out that there are two types of investor: the get-rich-quick kind, and the in-it-for-the-long-haul variety.

'The trick is to find property in an area where you have long term tenants, people who work all the time but don't earn a lot of money. This way the consistent rent can pay off the mortgage, and your property becomes an asset. Only then do you start to make any profit,' he says.

He advises against using letting agents and encourages landlords to manage the properties themselves. 'I wouldn't mind paying a letting agent if they cared about the tenant but most of them forget about them once they have signed the contract.'

But lettings agents do have their uses, especially on the legal side, and are a useful source of advice. They can help finds ways for landlords to avoid being squeezed.

David Alexander, proprietor of lettings and estate agency DJ Alexander, warns against selling up, even for those who are recent entrants into the market and have not yet had the comfort of seeing their properties rise in value.

A big issue is rent. As rents in popular areas have been going up it is easy to think about increasing them. Alexander says if a tenant leaves and a new one comes in then this is a possibility. But it is not such a good move for existing tenants. 'Loyalty pays dividends. If the current occupier has been a model tenant it may be wise to limit any increase,' he says.

Selling is a false economy. 'Once the recovery comes many rental properties will again show a capital growth well beyond inflation,' he says. If finances are tight he advises considering a manageable equity release loan. And though re-mortgaging is not easy at the moment if you shop around you'll find something suitable.

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