The quality of the journalism in the FT is usually very good and way above the curve. Why? Well, whilst the masses can fume over pictures of Diana's corpse or the latest picture of Paris Hilton's nipple the people that run our lives need to be in the know.
Anyway: looks like the smarter BTLers are starting to smell the bacon and are pulling their noses out of the trough. Of course, there will still be the johny-cum-latelys who think they are a property developer and will make 'miwions' because they've watched Sarah Beeney's show a couple of times....
Buy-to-let investors rush to sell amid rate rises
By Jim Pickard, Property Correspondent
Published: May 30 2007 03:00 | Last updated: May 30 2007 03:00
Landlords are selling off properties in growing numbers as rising interest rates and falling rental returns take their toll.
The proportion of buy-to-let investors selling their property at the end of their tenant lease jumped to 5.2 per cent in the first quarter of the year, according to a survey by the Royal Institution of Chartered Surveyors (Rics). This was much higher than the 4.1 per cent figure in the final quarter of 2006. The level of selling is now at its highest in two years, according to the group.
David Underwood, an estate agent based in Stanmore, Middlesex, told Rics: "Many smaller portfolio buy-to-let investors are selling, some to cash in on capital gains."
In Dorking, Surrey, James Turnbull of White & Sons, said there was an oversupply of new flats.
"Due to the buoyant sales market, some private investors are now taking capital profits," he said.
Interest rates have leapt four times since last summer and many analysts are predicting a further jump in the cost of borrowing later this year as the Bank of England's monetary policy committee seeks to combat inflationary pressures.
But the unstoppable rise in house prices - in contrast to only modest growth in rents - has left yields (rents as a proportion of house prices) at record lows. Typically, a residential property may have a gross yield of 5 per cent.
After costs and allowing for vacancies, the figure may be closer to 3.5 per cent, far below the 6 per cent or so needed to service many buy-to-let mortgages.
In spite of this, tens of thousands of investors are still buying residential -property with a record 330,000 buy-to-let mortgages taken out last year, according to the Council of -Mortgage Lenders, a rise of 57 per cent on the previous year.
Rics predicted that many more landlords may bail out of the market while prices remained strong.
"Many landlords are -selling into the still tight housing market in light of falling gross yields and -rising borrowing costs," said Rics.
"May's interest rate rise combined with the -prospect of another rate rise in the coming months may yet lead to further landlord sales as they come under greater financial strain."
The survey found that tenant demand was slowing with landlord instructions remaining "weak". Overall tenant demand increased at its slowest pace since the start of 2005.
Copyright The Financial Times Limited 2007