Is 2014 a Good Time to Buy to Let?

publication date: Dec 19, 2013
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author/source: Kate Faulkner

Is 2014 a Good Time to Buy to Let?

Everyone involved in buy to let says every year ‘now is the right time to buy’! Of course they are bound to say that as they make their money from buy to let investment.

Download our regional property price forecasts to help you predict what your existing or new property purchases will be worth from 2014 to 2018.

Rising prices aren't necessarily good news for buy to let investors

However, it’s not necessarily true at all. Ideally for investors who have lots of equity in an existing portfolio, the best time to buy is when properties are going down in price as you can secure more bargains. If property prices are rising as they are expected to do in 2014, then that’s a problem for property investors. The reason being is rising prices mean its’ tougher to get a bargain and as rents don’t typically grow at the same rate as property prices, yields tend to go down too, so it’s tougher to get a property deal to stack up financially.

So for most property investors, to make good money in 2014, you will have to be patient and then quick to find a property which stacks up. And the property price forecasts are incredibly useful if you want to make money from capital growth as opposed to income.

And if the forecasts are correct, if you buy a property now in areas such as London, the South East and West, East of England and the East and West Midlands, then in five years’ time, the property’s value could have increased by 19 to 39%, giving a good return on property investment over and above inflationary increases of around 16%.

So for existing investors, property price rises are good news as existing stock increases in value, however it makes it tougher to secure new property investments.

Rising prices may be good news for new buy to let investors

For those new to buy to let though, property prices rising is potentially good news if you can find a bargain. But what you mustn’t do is ‘rush’ into buying a property because you are desperate to invest.

As a newbie to buy to let it’s more important to get the right deal, than just buy a property and keep your fingers crossed!

So it’s essential to get good advice from buy to let experts and local agents who understand how much properties rent for, know the gross and net yields and potential for capital growth of properties in their area.

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Which? Property books and one of the UK's top property experts.
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