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Investors Switch from Pensions to Buy To Let

December 2012

DORSET buy to let Specialists Bournecoast say that the two top priorities of Buy to Let (B2L) Investors are a boost to insufficient pension provision and a stable income for the future.

According to the annual B2L Survey from Assetz, these are the two main motivators for investors wishing to make new acquisitions over the next coming year.

The good news is that confidence in the UK buy to let market is strong, with 75% of investors saying that they intend to buy additional investment properties over the coming year due to low bank saving rates and poor returns on the stock market.

The survey revealed that only 5% felt that now is not a good time to invest in residential property due in the main to the belief that prices have further to fall, the difficulties in securing finance and concerns over the financial security of tenants.

Investors are taking the long term view with 65% stating that rental income for retirement is their main motivation. Just 8% cited short term capital growth as their reason for investing.

Bournecoast have seen a large proportion of investors buying either with cash or with a mortgage raised on their main abode, meaning they are not facing the usual hurdle of securing finance faced by homebuyers, with over half (55%) using a low loan to value (LTV) mortgage or buying outright, with 23% refinancing their home or an existing buy to let and 22% using a high LTV loan.

Most of those surveyed by Assetz said they are currently achieving gross rental yields of more than 6%, with almost a fifth achieving 9% yields or higher.

Simon Tebbutt, Business Development Manager for Bournecoast said; "Fortunately, investors are thinking long term with their main objective being to supplement their income upon retirement. Those investors with a lump sum from savings, redundancy or inheritance are looking at what it will pay out in an annuity and seeking alternative options due to the currently depressed pensions market. As a majority are already home owners, they are familiar with the property market and have faith in its long term growth and stability.

He added, "Raising finance is still a little tricky and lenders would rather allocate the limited funds they do have to the lower risk option of buy to let borrowers with large deposits and good repayment histories. The fact that interest rates have remained extremely low has protected landlords by giving them cashflow. Future rate rises, which are likely to be small and measured, are likely to be covered largely by rental increases. The worry that landlords may have with regards to their tenant's cash fluidity is carefully considered when finding a suitable occupant and we at Bournecoast have a very rigorous inhouse vetting system to that end to ensure all are protected."

Issued by:
Alex Eaton
01202 437888

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26 Southbourne Grove
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