The Government needs to force developers to build an ever-increasing
number of flats instead of larger homes. Despite this fact a leading lender is warning
that investors who buy brand new flats might wait a decade to got their
money back.
National HouseBuilding Council figures show that 50 per cent of new homes completed are flats and maisonettes, while the percentage of detached homes has shrunk to under 18 per cent.
With so many new schemes marketed heavily at investors, some with rental guarantees, there will be some losers unless investors can sit tight for ten years.
When prices stagnate investors can only make a profit if they buy below market value and make improvements. Typically, you do this by finding a family house with dirty rooms, scruffy kitchen and bathroom a bit bashed about. This reduces demand, because buyers don't like to lake children into a dirty environment, so shrewd investors buy and restore before letting it out.
Landlords get an 85% to 90% buy to let mortgage. The other 10 to 15 per cent
of value they add themselves by buying below market value so they effectively build a portfolio without actually using any money of their own.
Landlords still buying in today's market are spending around £125,000 as a national average — with deposits of 15 per cent. Most new homes are much pricier than that.
