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RICS states only rich can afford to be landlords

November 18, 2007 by admin  
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Officials from the Royal Institute of Chartered Surveyors have stated that in the current economic climate only the rich can afford to become landlords, with investment properties being made inaccessible to many people because of the high level of deposit that many lenders are now demanding.

According to reports the level of deposit required on buy to let properties has increased by 500% since 2002, with the average deposit needed now being around 30% of the property value, equating to an average of around £65,600.

In the first quarter of 2002, according to the report, only around 8% or an average £10,100 was needed to invest in a buy to let property. RICS officials state that the high level of deposit needed means that many potential buy to let purchasers have been put off or simply cannot afford to get their foot on to the buy to let ladder.

However, the Institute states that the situation could ease somewhat next year, with interest rates likely to fall and house prices likely to drop or remain stable. This could see an increase in the number of consumers deciding to invest in buy to let.

One economist from the Royal Institute of Chartered Surveyors stated: “It takes more capital than ever to set up a buy-to-let investment. Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined. However, existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones, and this should ensure that demand from the buy-to-let sector does not dry up entirely.”

Tom Smith
18th November 2007

Tags: surveyors, Mortgages, landlord, buy-to-let, deposit, investment, equity

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