According to an article by the Financial Times, The Halifax claim that “UK house prices were up 105 per cent in the 10 years to December 2009, while buy-to-let landlords could have made total returns of 187 per cent including rent” the article continues “Halifax’s buy-to-let performance is based on the original value of the property and includes a 33 per cent deduction from gross rents to cover costs. However, landlords with mortgages would have been able to make even higher percentage returns compared with the deposit they committed.” (Quote from the Group Economist at Halifax)
Hold on a minute…. 187%?! At this point I would first like to invite the Halifax to perhaps publish a case study or two, or at least maybe declare how this conclusion was reached. Secondly, if you are an experienced Buy to Let investor, with a track history over the past 5 years minimum, please do contact us with your opinion on the subject, good or bad.
Wide sweeping statements and statistics like this are precisely what has caused the recession we are in right now. The Halifax fails to wheel out any examples of anyone who has actually made anywhere near this kind of gain from within the Buy to Let industry, professional or otherwise. I am sure there are Buy to Let companies and individuals that have been invested and active in the business over the past 10 years that would be screaming from the rooftops to all and sundry if they had made these kinds of gains, yet as I lean out the window, ears a-straining with an ear trumpet, it would seem I can hear no such claims! Perhaps they are all on their private islands somewhere?
Such statements indeed have to be questioned also when we look at who is actually stating the facts. Take a look at the 10 year stock chart for Lloyds Banking Group. (Owners of the Halifax brand)
(To see a current quote, click on the image)
Hmm. $40+ Dollars down to $3.22? A whopping minus 92% since December 2001! (At time of publication) Surely this would suggest the banks (in general) should be looking at the Buy to Let sector itself as an investment? If there is one thing to be learned when considering expert opinion, it often pays to just quickly analyse who is doing the analysis and what the results are backed up with.
Experienced UK Buy to Let investor? Send us your opinions here.
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- Friday 26 February 2010