Property recovery specialist, Property Portfolio Rescue says that several landlords could set to lose their buy to let investments as they try to meet repayments once interest rates become normal. Property Portfolio says that landlords could hope to cover for 20% of all repossessions by the end of this year.
The economic downturn has hit landlords hard mainly because of an excess supply of property and tenant redundancy. A little over more than half of the landlords are on tracker or variable rate Mortgage and are striving to meet repayments until given a respite by consecutive fall in interest rates resulting a considerable improvement in their income. However, problems for landlords will increase again when the cost of borrowing will rise. While some landlords will prudently use the additional amount and keep it as a buffer in periods of void, others will use the rental income for other commitments including another buy to lets or their own owner-occupier mortgage.
Landlords are facing a difficult period with a decrease in demand and an increase in lean periods but those on variable and tracker deals have been given a respite by dipping interest rates and a strong cash flow. Cash flow is the largest risk in property investment and landlords must be extremely careful and should not be lured by a false sense of security. If you are an intelligent investor, you will take advantage of this situation and increase your cash reserve.