As many home owners who let their property continue to look for cheap insurance for landlords deals, the question being posed for newcomers into the market, is whether this is a good time to become a buy to let landlord.
Cheap insurance for landlords is a preoccupation for many, but the bigger question has to be, is it worth getting involved in the first place. Is this a good time to be contemplating buy to let schemes?
Landlords insurance in the background for a moment, the property market is weak, the rental market by contrast is buoyant, there’s little money from savings and unless you fancy blowing it all on the stock market, then buy to let must seem like a good proposition.
The rental market is healthy because there are so many first time buyers who just cannot get onto the first rung of the housing market.
In short, for someone who has plenty of capital, but no-where to put it, going for a buy to let scheme can give good dividends, literally. Money in the bank tends to deliver a paltry sub three per cent interest; more than likely around half to one cent. A house priced around £150,000 should yield five per cent plus. Traditionally, the stock market tends to deliver a return of three per cent across a balanced portfolio. So, there are some good returns to be had.
The problem in the past has been timing. Buy to let has a bad name because the last housing boom encouraged more than a million people to invest heavily in the housing market – in order to catch tenant income – only to find that when house prices slumped, so did their investment. Bricks and mortar always goes up – but it’s the timescale that can vary so much. Housing booms bring massive and rapid returns, but hang around too long, and those returns can go up in a puff of smoke.
There are a number of sad cases where people have brought properties – especially City centre flats – ‘off plan’ and when mortgages were cheap and plentiful, only to find that they haven’t been finished (the developer, or builder has gone bust), or that once finished, they are less than their original value. And the rent they command pays less than the cost of keeping the flat. So, understandably, buy to let are dirty words for some property owners.
But all those troubles to one side, experts now reckon it’s a good time to get back into the rental market and even the once infamous buy to let mortgages are making a return. One thing is for sure though, once someone has bought their property for rent, its eyes down for finding the best cheap insurance for landlords.