There is no evidence of an exodus from buy to let according to a survey by The Young Group, which specialises in providing Property Portfolio Management services to private investors.
The Young Index results for Q3 2008 recorded that 98 percent of investors indicated that they intend to hold investment property over the next 12 months and that the majority of buy to let investors are looking to the medium to long-term.
More than a third of respondents intend to hold their property investments for at least the next 10 years and more than 20 percent expect to retain their portfolios for 15 years or more.
By far the most common reason for people holding property investments is to provide for their future. Their long term aim is to build wealth to boost their pension provision.
Neil Young, CEO of Young Group, said: “To a certain extent, short term market fluctuations aren’t a concern to most investors as long as their property is financed appropriately and paying for itself in the short term.”
This quarter’s Young Index shows a slight increase in positive sentiment towards house prices across the UK as a whole, but most noticeably within London.
Respondents to Young Group’s quarterly market survey of buy to let investor sentiment indicates that more than half (55 percent) of investors believe that property prices in the capital will remain at current levels or rise by this time next year, up on last quarter’s results and showing a level of confidence more than 4 ½ times greater than for property outside of the capital (12 percent).
Young added: “The positive shift in sentiment is by no means dramatic, but does demonstrate that investor sentiment has held steady and not slipped despite the current economic upheaval.”
Confidence in the capital’s property market remains around four times higher than the rest of the UK, with 32 percent of investors indicating that they intend to buy additional buy to let investments within London during the next 12 months.
Young attributes this to the inherent gap between supply and demand that exists in London; the capital has the advantage of strong demand for housing from a population that is expected to swell from 7.2 million to more than 8 million by 2020 and is also the city most affected by changes to the country’s demographics. As a nation we’re living longer, marrying later and more likely to live alone than ever before.
Young said: “The demise of Inside Track and Grant Bovey’s Imagine Homes being handed to HBOS sends negative messages. But their business models did not focus significantly on the London market and their exposure in regional locations where there became an over supply of property driving down prices was not insignificant. At a time when property valuations at completion are vital to purchasers being able to secure funding to complete their transaction, the businesses proved unsustainable.”
He concludes that this does not mean that buy-to-let is dead. “Investing in property to rent out is probably the world’s second oldest profession. As long as investors approach property investment with the same analytical and practical mindset as they would any other asset class, there are good long term gains to be made,” believes Young.
