Loans Scotland

Are buy to let owners speculators or investors who take otherwise undesirable properties, maintain them and provide a rental accommodation sector that local councils no longer provide?

As various experts ponder on the long term future of buy to let and also question whether the sector contributes to the economy or simply pushes up house prices, for many owners they see themselves as entrepreneurs who with few tax incentives take properties cheaply and then invest to make them available for rental.

Certainly markets like Edinburgh in Scotland have offered great opportunities to buyers with a huge demand for properties from renters and a steadily increasing price. How much of that is students and how much immigration is a very interesting question that should play out over the next few years.

One things buy to let owners should remember. They are largely viewed as speculators and so should not expect much support from politicians who are likely to see them an easy target for taxation. The latest changes in capital gains are not aimed at them, but at the same time nobody is crying for them either. Seatbelts, gentlemen!

There are mixed signals on Edinburgh property market: the Edinburgh Evening News and ESPC puffing like mad and Jo Citizen saying it is nothing but propaganda - read the comments on The Scotsman.

Edinburgh, like London has a mind of its own as “buy to letters” pour in to buy quality and supposedly high rental incomes.

Round the corner from Windsor Street, a tenement has had some serious structural work required costing each owner £60,000. Takes a quite a housing market to cover that sort of expense!

MoneyExpert believes that 1 in 3 applications have been rejected - or an estimated 372,000 of the 1.2 million people applying for a mortgage or re-mortgage in the past six months have been rejected. This is up from the 1 in 5 in the six months to March 2007.

This is the bread and butter of the housing market and suggests that moving house is going to be more difficult, that getting onto the housing market will be more difficult and taking equity out of houses will be much more expensive (actually the last is not a product of the argument, but let’s assume this is true.)

At the same time people with credit cards are finding unsecured loans more difficult to come by.

All grist to the mill for those who expect to see the housing market slump.

The IMF (International Monetary Fund) is predicting that house prices will fall after rising 50% more than they should have done over the past decade. They are overinflated and need a correction. Fortunately we are not alone -it is even worse in Spain and Ireland. As far as the IMF are concerned, the European housing market needs correction to be sustainable in the long term.

Do we think that Britain’s addiction to investing in property is about to come to an end? Not likely. Every drop in price will simply lead to investors “bargain hunting” because we are so damned irrational about the whole thing.  Anyway, none of the analysts think that there will be a full scale crash, more like a 2-3 percent fall over the next couple of years.