International Property Investments
For over a decade, property seems to have been immune from the
maxim ‘the value of your investments can go down as well as
up’. Faith Glasgow explains what part bricks and mortar should
play in a portfolio
There’s nothing new in holding a substantial part of your
assets in bricks and mortar - the British have always been terribly
keen on owning their own castle, even when they don’t have
the ready cash to maintain it. But the past decade has seen the
emergence of a new generation of private landlords/buyers taking
a long cool look at investment properties, with a view to that heady
combination of long-term capital growth from an investment that’s
paying for itself in the meantime.
Buying property to let has become a relatively run-of-the-mill
process - there are now more than 50 onshore lenders offering buy-to-let
mortgages, though fewer cater for the offshore market. And if you
want help in assessing the market, choosing a suitable property,
finding tenants and managing the let, you’ll find numerous
enterprises itching to offer their expertise - for a fee, of course.
International Property Investments & Buy-To-Let
The popularity of buy-to-let has been enhanced by the market conditions
of the past few years. Land Registry figures for 2000 as a whole showed
property price increases in Greater London of 18 per cent, higher
than in either 1999 or 1998, while over the last three months of the
year there was a rise of 13 per cent against the same period in 1999.
Meanwhile, the London rental market has strengthened recently,
according to research by estate agent Knight Frank. Tenant demand
was up 15 per cent over the year to March 2001 (notably in the Home
Counties), while supply of prime rentable properties fell by 30-40
per cent (particularly in central London) - the latter a reflection
of owners deciding to sell rather than rent their properties, in
order to reap the benefits of excellent capital growth. As a result,
says Knight Frank, prime rental values in London had risen by 11
per cent in the 12 months to March, and by 5.8 per cent elsewhere
in the UK.
International Property Investments - Buying property
But buying property to let is a long-term commitment. Here too, the
outlook is a rosy one. Statistics on capital growth from rental property
consultants London Central Portfolio - based on information from the
Council of Mortgage Lenders and the Land Registry - show that Greater
London average house prices have doubled five times in the past three
decades. In other words, if you bought a property for £5000
in 1969, it would have been worth £160,000 in 1999. And if
you take into account net rental income as well, the value of that
1969
purchase has increased 40-fold.
Taking a 25-year view, Knight Frank says: “Total returns
on residential property have outperformed all asset classes (including
commercial property), with the
exception of equities.”
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