Property investment returns finally turn positive

Property investment returns finally turn positive



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Annual property investment returns turned positive in October for the first time since the UK sank into recession, according to the latest Rental Index from LSL Property Services, which owns the UK's largest lettings agent network.  

After taking rental income and the slight fall in house prices into account, a landlord investing in property a year ago would have made a 2.4% return. 
 
The last time residential property provided a positive return was in the year to July 2008 on property bought in July 2007, just before the credit crunch began. The worst time to invest was February 2008. Anyone who bought a rental property then can expect to have lost more than 11% by February this year, as rents fell and property prices dropped like a stone.
 
By contrast the best time to invest was April 2009 at the bottom of the market. Those who bought a rental property then can already expect to have earned 7.4% in rent and rising house prices, equivalent to an annual return of over 15%.
 
Last week CML lending data stated that buy-to-let lending increased in the third quarter for the first time in two years. The number of buy-to-let mortgages taken out grew between July and September of this year, from 21,600 to 23,700.
 
David Brown, commercial director of LSL Property Services, commented: “With numbers of loans increasing for the first time in two years, the buy-to-let mortgage market is returning, a little. But it's a slow process - the number of loans is still only a quarter of that in 2007. We still need to see a relaxation in lending criteria for prospective landlords to sustain this progress.
 
“With all the attention on first time buyers, we mustn’t forget that landlords and property investors play a crucial role in the housing market- providing accommodation for those who are unable or unwilling to buy. There are hardly any specialist lenders in the market now, so mainstream lenders need to cater to buy-to-let investors, and play their part in the continuing recovery of the buy-to-let market.”

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