Thursday, August 25, 2005

Landlords hit by oversupply of buy to let flats

Scotsman.com Property - Property News - Troubled waters for landlords: "

Thu 25 Aug 2005

GREG GORDON

It seems like only yesterday that every man and his dog wanted to be a buy-to-let investor. Buying off-plan on the waterfront was a passport to riches and staring off into the horizon all we could see were calm waters offering exponential capital growth and a tidy sum each year from rental profits. As the reality of both over-supply of investor-friendly flats and over-optimistic predictions takes hold, however, the tranquil waters of buy-to-let have taken on a distinctly choppy cast.

Paul Mugmaioni, a director of rental sector investors Quality Street dates the sea change in the newbuild rental market to the interest-rate hike around a year ago. That rate raise, allied to a general cooling in the housing market, precipitated a mass investor exodus from buy-to-let and a climate where the speculators consolidated their positions while looking elsewhere for investment opportunities.
The rental expert estimates that oversupply in the rental sector and the effect of large-scale development on supply, particularly at Glasgow Harbour, has seen landlords' annual rental yields slashed and in some cases, the value of some waterside apartments have dropped by 30 per cent. "

Buying off-plan city centre apartments was an easy way to make money a few years ago - now it's a quick way to lose it despite the hyped-up claims of those still promoting this kind of investment. Beware!

Chris

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