We’ve all heard of a baby boom but it seems that we could be on the verge of a buy-to-let boom according to Yorkshire based mortgage broker Meridian. With house prices creeping up it is possible that the buy-to-let market will be buoyant in 2012.

With expectations increasingly not been met on their investments and pensions, people today are using savings or equity in their main homes to start their buy-to-let portfolio – a popular tactic amongst serial investors. Mortgage brokers are finding that more independent investors are adopting this tactic due to the better rent yields available and the lower interest rates available from the banks.

Co-founder of Meridian Mortgages, Mr Derry Walton said,” Depending on where the money is invested, a yield of between five and seven per cent can be achieved, which is very attractive when compared to most other options.”

“More and more people are securing mortgages as lenders relax the criteria, for example, Woolwich has recently increased the amount it is prepared to loan on a buy-to-let mortgage from 60 to 75 per cent of value.”

It is becoming more apparent to potential investors that there are a number of schemes available, all of which are encouraging investors back to a now prosperous buy to let market that struggled 3 years ago.If you need proof that this is more than speculation, independent financial research company Defaqto found that the number of buy to let mortgage products on the market has grown by 104% over the last three years.

Whether a passive or hands on investor, many are regarding buy to let as a potential growth area.

Growth is exactly what lenders and investors alike are anticipating, as wide spread uncertainty regarding the wider housing market is fuelling rental demand. Despite the drop in house prices since the recession, first time buyers are struggling to secure a foothold on the property ladder, so now is the time to utilise the surplus of tenants looking to rent.

The result therefore, is that rental yields are generating better returns than many cash investments making it an increasingly attractive prospect for those lucky enough, at this crucial time, who can afford to invest.

John Heron , managing director of Paragon Mortgages explains, ”2012 seems set to be a more successful and challenging time for the buy to let and general mortgage market as the impact of Eurozone crisis and wider economic factors hit us. “However, it’s positive to see the level of optimism among intermediaries and the fact that more than half expect to increase their level of buy-to-let business throughout the course of the year.”

The result is that rental yields are generating better returns than many cash or equity investments, making it an increasingly attractive prospect for those who can afford to invest.”

From the view of an investor it is always useful that you consider expert advice prior to making cash intensive decisions with your savings, if you are a first time investor.

Choosing the right property, in the right location, at a good price where the rental demand is high is important in managing expectations of the possible yield achievable, to ensure your money is working hard for you.

Financial resolutions count for just under half of the survey, with over 40% of people planning to make positive changes to how they manage and invest their money. As expected some find it easier to stick to those resolutions than others with 66% of people confident that they can deliver on their good intentions. With a brand new year upon us, it seems all options should be assessed regarding where your money will go this year.

The option of leaving your money to lay stagnant in a low interest account is less and less appealing to more and more people. The ongoing volatility in the stock market, pensions uncertainty and the increased risks of investing in overseas property is leading more and more people to look at UK buy to let investing again as a way to secure additional income and long term gains.

As the challenging economic climate continues to bite, many are choosing to profit in a more long term and secure way, by investing their money in property and starting to build their very own property investment portfolio.
Many people have carefully considered strategies and clear goals to see their resolutions out, with more and more choosing to reconsider their longer term strategies for wealth creation and pension security.

Having a clear goal of what you want to achieve is always a great place to start.

Being clear about whether you are investing for short term cashflow or longer term security is critical. Most will say that they want both and in our opinion property is one of the safest and most lucrative ways to achieve this.

Now is a great time to reassess whether you are investing in the right asset classes and if you don’t have property then now is a great time to start. If you already invest in property then expanding your portfolio during 2012 could be the best decision you make to secure your financial future.With the market having fallen significantly in recent years, the lack of competition for deals and a strengthening rental market, buy to let is becoming more and more profitable. Add in a long term view, introduce some smart leverage and secure a significant discount on purchase and you have a winning combination which no other asset class can compete with.

Buy to let lender Paragon seem to agree, with their research saying that more than half of landlords expect tenant demand to remain high in 2012.

Nigel Terrington, chief executive of Paragon Group, said: “2011 was certainly a good year for the buy-to-let market, with not only increasing tenant demand but landlords investing in their portfolios, low levels of arrears and more available finance. We should look to 2012 with optimism as it is sure to bring further opportunities.”

Data from the quarterly survey showed that 56 per cent of the landlords surveyed expect tenant demand to either “grow or boom” in the New Year, compared to 45 per cent who were asked the same question at the end of 2010.

Interest rates remaining at an all-time low have severely impacted growth on savings and an extremely volatile stock market has left many investors in a state of confusion about where they can safely place their money. Only last week reports suggested that poorly designed investment strategies have resulted in many defined contribution, or personal pension funds losing a quarter of their value in just seven weeks.

As a result, Nick Carlile says that interest in buy-to-let investments has risen sharply as ever-increasing rents have attracted investors. “Property provides an asset backed income stream which, despite being subject to periodical peaks and troughs like anything else, has still averaged 4.9% growth per annum since 1970.  House prices have doubled in the last decade, even taking into account the property correction of 2007-2009. Over the last thirty years residential UK property has out-performed both commercial property and equities”

This surge of interest in buy-to-let as an investment strategy is a trend that has been echoed across the market as UK housebuilder, Barratt, has also recorded a 25 per cent rise in sales to investors for the first half of this year. 

Nick says that the secret to this strategy however, is longevity and that mistakes that many investors have made previously have been to only to look short term. “You have to treat buying a property like any other investment which means setting goals and thinking about a time frame and strategy as well as what you can afford to spend. It’s best to hold on to a property for at least seven to 10 years to achieve good capital growth.”

Nick adds “House prices won’t necessarily go up evenly from one year to the next but rising rents and greater demand for rental properties than ever before offers a source of income whilst investors adopt a buy-and-hold strategy to protect themselves against market movement.  Also because of the overall position of the market this is certainly a buyers’ market where significant discounts can be achieved. Gone are the days of the short term buy and sell to make a quick buck, but investors need to realise Property is a solid wealth creation vehicle with built in capital growth opportunities.”

• Increased Property Prices
• Low interest rates
• High rental yields
• Buoyant rental market

Here at Platinum Portfolio Builder we already have many clients investing with us but over the last few months we have seen an 18% increase in the numbers of people enquiring about our investment products. If we look at the figures, it’s not hard to see why.

Over the last 12 months average property asking prices have risen by £4,617, roughly in line with CPI inflation at 2.2% and therefore outperforming other investments including instant access savings accounts and the FTSE 100. As we are all too aware, interest rates have remained at rock bottom throughout 2011 meaning that savings accounts have not been performing well either – the average instant access account now offers returns of just 1.04% which means that the motivation to save is just not there at this present time.

Naturally, investors are always looking for their money to be working. Therefore, if you have a sizeable amount of capital sitting in a bank and it is not working, much better to move that money into profitable investments.

Paul Harrison, who is operations director at Platinum Portfolio Builder, also sees evidence of the move to property investment, “Since the beginning of 2011, property prices have performed well, which is obviously great news for homeowners. Current prices may still be below the peaks we saw in 2007 and have some work to do before experiencing pre credit crunch growth rates, but with all things considered and in light of the economic challenges of the past few months, home ownership is clearly shaping up as a good and viable option for those looking to invest their savings.”

In the property investment market, prospective clients are always keen to know how quickly any investment will start working for them and with the current UK rental market really booming property investors are experiencing no problem in filling their properties.

The average rental property in the UK now has up to 5 rental applicants each and these properties are now filled within an average of 13.5 days. Further to this, recent data index from FindaProperty.com showed that rental yields this past quarter averaged 4.75% which is significantly better growth than either equities or cash are currently experiencing.

Here at Platinum Portfolio Builder, we firmly believe that investors are still out there looking for deals and in the last 12 months these investors have become much more willing to consider property as an investment opportunity that with the right guidance can become a profitable way to increase income streams during this current economic downturn.

We are receiving more and more enquiries from potential investors, both UK based and overseas as we strive to offer the best alternative to traditional investments and pensions.  Our model is tried, tested and proven to offer market leading returns in this secure and profitable ‘asset class’. We firmly believe that the UK property market is still vibrant, perhaps just not in the way many expected it to be.

Nick Carlile, who is Founding Partner of Platinum Portfolio Builder and has worked in the property construction and investment industry in and around Yorkshire since the age of 16, believes that renewed faith in the market has sparked a surge of interest. Nick comments “Even though a 25% deposit is still required, this is more achievable on a £100k property in the North than on say, a £250,000+ property in the South, where prices are still considerably higher.”

According to Carlile, experienced investors are recognising that stagnant house prices and high demand for rental properties from those who can’t afford to make a purchase, are making investments more accessible with greater security of a good return. “The north, versus the south, offers much greater opportunity to buy more than one property, building a portfolio over a faster period of time.  If managed correctly, it has the potential to return much higher returns than in the South where yields are often half what is achieved in the North (average gross yield of 8.9% achieved by PPB in the last 12 months).”

Nick adds “Having made many such investments myself in Yorkshire, I believe investing in property here has many opportunities.  Of course, there are thousands of micro-markets in the UK and this is just one, but successful property investing is about understanding these micro markets.”

Regional towns and cities in Yorkshire benefit from high yields, robust rental income and strong prospects of future capital growth, offering ideal conditions for those with money behind them or a decent deposit. Nick comments “Capital growth is part of a medium to long term investment, especially in the current market, so rental yield is crucial. Yorkshire offers a secure buy-to-let investment from a more affordable starting point.  There is more scope to purchase properties with a significant discount; on average we achieve 26% below survey value for our clients with an average gross yield of 8.9%. Typical yields for London are said to be around the 4% mark due to much higher property prices. 

Platinum Portfolio Builder has recently seen an 18% increase in the number of clients wanting to invest in the last quarter, in particular from investors based overseas.  Nick concludes, “There seems to be a distinct improvement and renewed faith with investing in property and 2011/2012 is offering the prime time to do so. During 2010 the discount achieved equalled to over 2 million in equity for the benefit of our clients and shows the strength of such investments in the North of England.”

When the buy-to-let market crashed in 2008, so did the hard earned savings of many investors. Steve Bolton comments “The crash in the market and the growing media spotlight on rogue traders squashed investor confidence and so the idea behind the book was to explain how to sidestep the pitfalls that have tripped up so many investors.”

This year, a new edition has been launched with two additional chapters focusing on buy-to-let and passive investment, areas which Nick Carlile, who heads up Platinum Portfolio Builder (PPB) as part of Platinum Partners, specialises in. Nick adds “The primary impact on the property market, both in the UK and Europe, has been the reduced availability of financing.  While the fall in house prices are what have hit the headlines, the key issue for investors has been the massively increased level of capital required to finance a deal.” More recently, media attention has focused on properties yielding record-breaking rents in certain areas and so since adding the new chapters, PPB has seen an increase in people interested in their passive investment opportunity.  “It helps investors gain trust in investing in the residential property market when carried out correctly” adds Steve.

With buy-to-let lending improving and average monthly rents leaping to an all-time high of £701 according to LSL Property Services, people are once again considering bricks and mortar as a lucrative long-term investment.  However, the global property market and economy has shifted massively and so most are a lot more cautious this time around.  Steve adds “Investors should, and appear to be, treating property as a business not a hobby, and I believe that, unlike before when pretty much anyone could buy and sell a property and make money, investors want to learn and be advised on the correct way to go about this and I think this has led to the increased sales of ‘The 7 Biggest Mistakes…’

As well as being endorsed by high profile figures from the property, business and personal development spheres, such as Simon Woodroffe, entrepreneur and founder of YO! Sushi and Yotel and Kate Faulkner, author of the Which? essential property guides, Platinum Partners has received increasingly positive feedback from purchasers who have read the book.  One said “it’s such a shame I didn’t have access to this information eight years ago. My property purchasing could have been so different and I would have avoided at least a few of the mistakes I made”.  Another reader remarked  “this should be inspirational to pretty much anyone who’s going into business for themselves and offers some really good advice just for getting where you want to be in life, whether that’s in property or otherwise.”

‘The 7 Biggest Mistakes Made by Property Investors and How to Avoid Them’ can currently be bought from Amazon directly or via www.platinumportfoliobuilder.co.uk/resources/book

Nick Carlile of Platinum Portfolio Builder says “Whilst it is never too late to start planning how to achieve financial security for retirement, the earlier you take action the better. However, we have found it is often at the point where would-be retirees realise their pension fund doesn’t amount to as much as they had forecast, that they consider alternatives in the hope of making a “quick-buck”, but this is a risky and unrealistic strategy.”

A combination of cut backs in company schemes, private pension funds massively underperforming, the rising state pension age and ever-declining annuity rates make for poor pension returns, whilst rock-bottom interest rates continue to be to the detriment of savers. Nick continues “A large proportion of people in the UK have an inadequate pension provision and a recent survey by Scottish Widows found 20% are making no provision at all. Many of those that have built a decent fund do not monitor its performance until it is too late to do anything about it; it’s much more sensible to check how your pension is performing on an annual basis. The last few years have demonstrated that we cannot rely on traditional pension funds growing and being the sole vehicle to finance retirement.”

According to Platinum Portfolio Builder, over the last year, buy-to-let landlords have seen significant increases in their rental returns as young, savvy professionals of “Generation Rental” accept they are not in a position to buy. This is a growing and lucrative market open to investors, one which was not available at a time when it was taken as read that pension funds were the best option and should be left as late as possible to provide a higher pension through tax-free growth. “Times have changed and retirees are able to control finances and investments themselves rather than handing to a stranger who will decide their financial future. The simple fact is people must plan for retirement as early as possible, there is no quick fix but the earlier an investment strategy is in place and a clear breakdown of what income will be available, the better off retirees will be.”

House price indices for April reported that property values are “continuing a trend of modest decline” with the exception of micro-markets such as London and areas of the South East, yet May figures have shown a modest rise. Nick Carlile comments, “the more strict lending criteria has forced a lot of novice investors out of the market, providing an opening for those with greater capital to take advantage of the stagnated housing market, which is demonstrated by fluctuating prices, and some favourable mortgage deals.”

Paul Cronin, from Surrey says he started to lose patience with the poor performance of his savings and with property prices falling, recently took the decision to dip his toes in a more adventurous method. He comments “The traditional pension and savings situation is dire. Since I am hoping to retire within the next ten years, I felt I needed an investment with longevity. Although I had some experience in purchasing buy-to-let property, the market has changed so dramatically over the last few years I didn’t feel confident in investing in any property, so I sought help and chose to start a buy to let property portfolio.

My first property was bought on a ten day exchange which offered an advantage over other buyers and this has now been refurbished, tenanted and managed on my behalf. I now have a growing portfolio my current portfolio has an average annual gross yield of 8.3%.”

Nick Carlile adds, “Last year alone, Platinum Portfolio purchased property at an average of 26% below surveyed value and with property prices under even greater pressure and the likelihood that they will continue in this vein throughout the second half of 2011, building a profitable property portfolio is currently more acquirable in a shorter space of time, as the percentage of equity in each property is greater. Once the market is on the floor, the only way is inevitably up, and although this requires a long term school of thought, now certainly is a buyers’ market for those that can afford it”

With a reported 22% increase of people looking to buy in the first third of the year, it would seem investors are starting to recognise this.

For many, this was largely an unexpected change of direction for inflation, and as a result eases pressure on the Bank of England to raise interest rates at the present time, with experts now saying a rise is unlikely until August. This is especially good news for those buy-to-let investors who have been able to take advantage of record low interest rates and improved rental demand for past 24 months.

Nick Carlile, Founding partner of buy-to-let property specialists, Platinum Portfolio Group, comments “From an investor’s point of view, how much impact inflation has, really depends on how much actual cash you have to play with and whether you can afford the squeeze on your finances that an inflation rise implies. When inflation rises it means that not only does the everyday cost of living increase, but all the goods and services you buy when developing a property to sell on or rent out, also become more expensive. These can include surveyors, plumbers, electricians and solicitors as well as paint, flooring and curtains. If rates were to rise on top of this, it’s easy to see how investor profit margins get squeezed from all directions.”

Two important factors to consider when working out a properties’ investment potential and how inflation rise and falls will affect you, are factoring in rising rental incomes if you’re investing for buy to let, and of course, purchasing the property at the best possible price.

Inflation, simply defined, is the erosion of the buying power of money. Nick continues “The interesting thing about property investing is that over time it offers some protection against inflation. Because many buy-to-let property investors have borrowed money to invest in a real asset, they are letting the bank’s money erode in value while they, in exchange, have a real asset (an investment property) that should retain its value over time.

With falling inflation and continued low interest rates the outlook seems bright, even for those considering dipping a toe in the property investment market for the first time.”

Nick Carlile, Founder of Platinum Portfolio Builder, explains why he believes investors are looking beyond the banks. “Savers are finding it increasingly difficult to find accounts that protect their funds from inflation erosion with only a reported eight accounts that negate the effects of inflation for basic rate taxpayers, and significantly no such option exists for higher rate taxpayers.  Many people will see inflation eating into their hard-earned savings faster than it grows, which is to the misery of those approaching retirement that were relying on savings to supplement their income.”

Conversely, low interest rates, high rental demand and improved lending in the buy-to-let sector are making conditions ripe for investor landlords to really make the most of the current market, expand their portfolios and capitalise on the unassailable fact that more Britons have to rent.

Nick continues “Investing in property is not a ‘get rich quick’ scheme, and many of the new clients we have seen come to us in the last quarter have little or no experience in property investment, but are looking to learn how it can be done correctly in order to provide a sound investment and profitable return in the long term.  Despite the Government pledging a £250m package designed to help first time buyers, the fact is tenant demand has already hit a two year high. Unless mortgage availability improves, then predictions that one in five households will be in the private rented sector by 2015 will ring true, thus providing sustainable long term opportunities for those looking for somewhere other than the bank, to invest their money, and make the most of the ‘age of renters’ which is now such a vital part of the UK housing market.”