Landlords’ confidence in capital gains has almost trebled over the past
two years, according to the National Landlords Association (NLA).
Landlords’ confidence in capital gains has risen from 18 to 52% over
the past two years, with a seven-fold increase in confidence in the UK’s
financial markets over the same period (up from 5 to 37%).
However, the findings show that a third (32%) of landlords say they
might not be able to meet their mortgage repayments if interest rates
were to rise in the near future.
Despite its findings NLA is looking to talk down capital gains
prospects and has warned against relying on capital gains as a primary
investment strategy. The warning comes after the Financial Times
recently reported the estimated capital growth of private rented housing
stock to be of £177bn over just the past five years.
Carolyn Uphill, NLA chairman, said: “It certainly feels like a great
time to be looking at buy-to-let a means of additional income but you
cannot simply rely on the prospect of capital gains as an investment
strategy.
“A lot is being made of capital growth but landlords must remember they
are in the business of providing homes for people. It’s a risky
investment and the prospect of capital gains is only realised if and
when the property is sold.
“With house prices levelling off and inevitable rises to interest rates
as the economy improves, anyone considering investing in buy-to-let
should think carefully before taking the plunge. This means planning for
the long term and looking to sustainable yields, not hoping for a
windfall in capital appreciation.”
The news comes as the NLA launches the second part of its latest
campaign; rent, risk resolve, which aims to highlight the potential
risks of rising interest rates.
http://www.landlordtoday.co.uk/news_features/NLA-talks-down-capital-gains-prospects-as-BTL-confidence-soars
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