"ARLA's figures show that bricks and mortar still offer investors a good
place to put their money, with average returns around 7%, while their
savings returns continue to dwindle. With the average variable savings
account paying just 2.9% - even before this months Bank Base Rate cut ? and
almost nine out of ten buy-to-let properties producing rental returns of at
least 3% - not to mention any capital growth ? properties offer a real
investment alternative. Combine this with the uninspiring performance of
the stock market and traditional investment returns, and buy-to-let appears
as attractive as ever.
"However, borrowers who are thinking about entering the market need to do
their homework. The old mantra of location, location, location has never
held more true with parts of London in particular at saturation point. The
reality is, if you pick your area carefully, then it can be a fantastic
proposition. For example, areas with high student populations are very
popular amongst buy-to-let landlords and still offer double digit returns."
Over £50 million wasted each year?
"A really interesting point to note is that over 20% of landlords pay a
standard variable rate on their investment loan and do not even check what
the rate is. This combined apathy is costing landlords over £50 million a
year, and knowing that these properties are used as an investment vehicle,
it is staggering that this kind of money is wasted. And, with over 10%
receiving returns of less than 3%, there are certainly some landlords out
there who can make their investment work much harder. For expert advice,
landlords should consult an independent financial adviser who can recommend
the most competitive products available."
