Insurance News Archive

Property investors advised to 'focus on somewhere to live'

The buy-to-let market is unsustainable and investors should look to buy a home to live in rather than to rent out, an expert claims.

Paul Holmes, chief executive at Firstrung, claims it is a "relatively new phenomenon" that is coming to the end of its lifecycle.

He argues "illusory profit" is already being eradicated and suggests once buy-to-let is wiped from people's consciousness it is unlikely to return.

Mr Holmes suggests the fact people have to put down 25 per cent deposits on such properties - £50,000 on average - is likely to see buy-to-let die.

"People have to stop thinking of property as a sexy investment where they can make money by doing nothing and start to think [of it] as somewhere to love not [as] a buy-to-let portfolio."

According to recent research by Paragon Mortgages, average rents have increased by four per cent over the last three months and by 12 per cent in the past six months.

This has led to a record average monthly rent of £1,000, with annual rent rising to a typical £12,041.

28 Aug 2008