10 Reasons to be Properly and Property Optimistic

The sun is out (ish), the trees are budding up (indeed) and the bunnies are bouncing …cheeky bunnies :- ).

Property prices appear that they may no longer be in free fall, having resumed a more orderly decline. In light of this we go in search of 10 reasons why landlords should be optimistic.

1. House prices are stabilising
We can’t produce evidence of a bounce in house prices for landlords, or even details of a much vaulted ‘green shoots’; but figures are emerging that suggest that the rate of fall is slowing, giving landlords more visibility on when we might hit the bottom. March saw the typical house increase in value for the first time since October 2007, rising 0.9% according to the Nationwide and a respected consultancy Lombard Street Research (LSR) has suggested property prices may bottom by Xmas.

2. Mortgage approvals are up.
The Council of Mortgage Lenders (CML) has reported a rise in the number of house purchase loans approved in February up to 24,300 from 23,400 the month before. Lending is critical to get the house price market moving and now the banks are re-capitalised with tier 1 capital at very high rates. Lending should start to flow once more.

3. Tenant demand remains high
Your Move recently reported that tenant demand was up strongly in February, 46% up on the previous year. Clearly if people can’t buy or are fearful of buying because of potentially further falls in house prices they rent. This can only be good news for landlords.

4. Rents are stable or may even be rising in some parts of the country.
For many landlords talk of falling rents is a mystery. It may be happening in the swankier post codes in London as impoverished bankers are forced to cut back. For many ‘average’ landlords rental levels have been holding up well. The latest figures from the Rent Index indicate that rents have actually being rising up 1.7% and 2.6% over the last 1 month and 3 months respectively. However in other parts of the country where I have properties…they have been going down! In particular Manchester town centre and Brighton areas.

5. Interest rates are at historic lows
With the base rate at 0.5% and at a historic low many landlords on tracker related buy-to-let mortgages are paying record low mortgage payments. The other good news is that latest predictions forecast that these rates could remain well into 2010 as the government battles the spectre of ‘deflation’. This means that landlords could bask in the sensation of cheap money for some months to come – however don’t ‘bank’ on it as I am sure the financial establishments are keen to increase them sooner rather than later! So dont get too comfy.

6. Record rental profits
Low interest rates means many landlords are experiencing unprecedented ‘rental profits’.
Some landlords are making a profit for the first time ever, and other portfolio landlords are generating £100,000‘s in annual rental profits. Not bad for a sector that is supposedly on its knees and at a time when other businesses are making huge losses and slashing jobs. Again we don’t know how long it will last so make contingency plans.

7. Costs are falling
Not only are finance charges falling, but because of the deteriorating employment situation building, repair, cleaning work for the first time in decades is getting cheaper. No longer do landlords have to beg and plead to get a quote. With the jobs situation deteriorating by the day it won’t belong before plumbers will be phoning up landlords and asking for work and at a discounted rate – oh joy!

8. Disappearance of the FTB whinger
How many landlords have got fed up with the stories over the last decade blaming landlords and buy-to-let for forcing up the price of housing so that ‘little Jemima’ cant afford to buy her 1 bed starter flat in Clapham because of all the landlords pricing her out of the market. Well the great news is that Jemima and all her winging cronies have all gone very quiet…this can only be a good thing for landlords and the rest of humanity!

9. Property bargains
There is nothing like a crash and a good economic shake out to allow a landlord to pick up a true long-term property bargain. It’s been true through out the centuries and any investment analysis will tell you. “The real money is made by investors who buy at the bottom and sell at the top.” Well we might not be quite at the bottom, but arguably you never know the market has bottomed until it’s too late. The next few years will certainly throw up some good long term for investments for property investors.

10. Hedge against inflation
Whilst the current talk is about deflation many economic experts are warning about the prospect of inflation taking off once all the money injected by the Government through the likes of ‘quantitative easing’ and the like have worked there way through the system. We all know the best hedge against inflation. You’ve guessed it – property. Sometimes being a landlord has its perks as well as its pitfalls (now that’s another article!)