Buy To Let Mortgages with homeowners facing rising costs of owning property
There could be jitters in the market, not least among buyers who now need an average deposit of £24,000, at Halifax's monthly report showing house prices fell 0.4 % in January.
Halifax, Britain's largest lender, says the price fall last month - to an average £170,833 - was the first monthly decline since May 2005.
Some pundits see little prospect of pick-up in 2007, with homeowners facing a double whammy of soaring energy bills and interest rates.
Halifax also says the number of first-time buyers in 2005 -just 320,000 - was the lowest since 1980. And its analysis isn't the only evidence of a wobbly market.
The National House-Building Council (NHBC) says the average anticipated selling price of a new home in the final quarter of 2005 - at £181,000 - was down on the same period in 2004 (£186,000).
That's grim news for investors who bought off-plan a year ago, and now seek tenants for an asset falling in value.
A one month price fall, or dull quarter, won't bother serious landlords, though it is deterring newcomers from entering the market. Regular investors remain keen on buying £125,000 homes with 85% loans, typically about £106,500. On a 4.9* mortgage, that costs £433 a month - so landlords can still show a monthly profit, regardless of capital gain.
Landlords also pay closer attention to running costs as capital gains fall. With the bargaining power of a portfolio, they can squeeze down charges by agents - and our new letting business, charging 8% (full management) and 4% (letting only) is off to a good start in several areas.
Landlords might have to work harder to buy a slice of prime Central London but they need it in a portfolio because prospects for rental and capital growth are much greater London prime property is a scarce, diminishing resource with so little land left to develop.
Try "emerging" areas like Bayswater, Hampstead and Paddington if Chelsea or Mayfair are too pricey.
You are never short of tenants if you get three key factors right: location, presentation and financial realism. The one good place to buy is Central London, which has been pretty flat for four years while continuing to attract domestic and inter national demand. If you can afford it, buy the sort of property in Central London in particularly short supply: lateral flat or wide house.
You can still make money, but make the right picks or live to regret it.
Avoid new flats where prices have been falling for a year.
Go for bog-standard, middle-market, family houses up to £250,000 in middle-of-town locations in places like Leeds, Harrogate, Oxford or Cambridge.
Houses are good for steady long-term capital growth which suits younger investors.
For rental growth, often preferred by older investors, stick to flats where demands tends to be stronger.
There are good buys all over the country when vendors needing to move quickly decide to cut asking prices to secure a sale.
You can even see potential in the leisure market; a pied a terre or cottage, perhaps in or near a National Park location, which is well-placed for the coast, good food and a regional airport. In the South West, the Peak District area close to Manchester and in Scotland, properties which will give pleasure to owners and earn rental income in holiday seasons are still attractively priced. This sector still has some way to go to realise the full potential of the leisure property market.
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