Is a Buy to Let Property Still a Good Investment?

However, as with any investment, buy to let is not without its downsides and profits are often less than landlords anticipate, especially new landlords who have perhaps under-estimated the additional costs involved in owning a rental property.
There have been conflicting reports about whether this sector of the mortgage market is improving or not, although there is still a commonly held opinion that the market has improved since the start of the economic downturn. Of course, as with any investment in property the way the investment is viewed will have an effect on how well it will perform as an investment. Using property as a medium to long-term investment will produce better profits than when used as a short-term investment when any property is more likely to be influenced by short term fluctuations in value, which will have a knock-on effect on the realisable profits.
Lenders seem to believe that investors are now focused on long-term returns, when prior to the credit crunch many buy to let investors were cashing in on the rapidly rising house prices to make quick capital gains. But other data suggests that the returns on buy to let investments are falling with average rental returns 2 - 3 per cent lower than they were pre-credit crunch. Although some discrepancy in figures indicates that some landlords still fail to take into account the letting agent fees and other general expenses such as repairs.
With many first-time buyers continuing to struggle to afford their own home, a report from the Strategic Society Centre has suggested prohibiting new build properties being bought with buy-to-let loans. Other lobby groups would like to see landlords no longer able to offset mortgage interest against tax and there has been some criticism of private sector landlords who often find it easier to obtain a mortgage than does a first time buyer.
So clearly there is still plenty of controversy surrounding the whole buy to let property sector and this has resulted in lenders being unwilling to make public just how much of their mortgage lending is made to landlords intending to rent out the property they are purchasing. This has not, however, prevented some of the major banks and building societies from aggressively pursuing the buy to let mortgage borrowers with competitive deals at attractive rates. But if prospective landlords are able to secure large mortgages, to a certain extent based on expected rental returns, what does that mean for the first-time buyers who do not have the deposit to secure a mortgage but can pay the rents demanded by private sector landlords?
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