Whether it’s your first time venturing into the Buy to Let market or whether you are a seasoned investor, you should still be mindful of the goings on within this sector.

As an initial consideration, the “traditional” buy to let sector thrives under a number of key conditions;

  • Relatively competitive property prices which are reportedly increasing steadily over time
  • A reasonably high rental population
  • Healthy economic/ political conditions to support rental payments

However, the dynamics of this market has transformed quite considerably over the last number of years. The world we live in has become much more sophisticated and, here in Northern Ireland, we are experiencing a new wave of real estate investment is beyond the conventional amassing of a buy to let housing portfolio.

Let us take a moment to look at some of the considerations in relation to this sector.

Increasing Housing Market prices

Observation

House prices in Northern Ireland are rising. In fact, Northern Ireland is reported to be seeing the one of the highest rates of growth compared with other regions in the UK. Surely this is great news for investors?

Consideration

This is a highly competitive market. There are a lot of players in this sector looking for similar investment types but with different investment strategies. All sorts or accommodation are available here in Northern Ireland, not just buy to lets. Apartments are available for medium to short term lettings, weekend accommodation and holiday accommodation which is very well supported by the array of websites such as airbnb.com, tripadvisor.com and booking.com to name but a few.

High Rental Population

Observation

Never before have we seen such a high proportion of the population renting as opposed to buying their home. Hence the #generationrent. The reasons behind this never seen before renting population are many but to name but a few there is the lack of deposit to purchase a property, low incomes failing to support lending, inadequate credit ratings etc.

Consideration

Another ideal circumstance for landlords. That said, there is a supply and demand issue in the rental market. We do not have enough homes to support the population who require them. And when there is a supply and demand problem, the cost for the under supplied commodity increases. In Northern Ireland, the monthly rents for very basic, unfurnished accommodation has soared. The question is, is this a good thing. Once again we are drawn to the reasons why #generationrent exists in the first place. In simple terms, the hashtag exists because this section of the population cannot afford to buy so where is the evidence which says they can afford to sustain increasing rents.

Healthy Economic/ Political Conditions

Observation

We can report with relative ease that the economic climate has settled down a great deal over the last few years. The Government assures us that the unemployment figures are down, investment in business and infrastructure is going well and the recession is well and truly behind us. Politically, we are in a little disarray about the future of our real estate market. That said, we are most certainly in a crisis situation regarding a UK wide housing shortage.

Consideration

Our economic climate is that of austerity, rising inflation, salaries/ wages not keeping up with inflation, rising cost of living and, the overarching point is there this less disposable income per household. The financial crisis may be “almost” over for the banks but it is certainly not over for the average wage earner in our society who receives pressure from all directions in order to meet their financial obligations. And I am not referring to people who are “in over their heads”. I am referring to people who are living a modest lifestyle but commodities are so expensive that the average person is financially stretched. Scratch the surface and you will find people renting houses for a higher monthly rental payment than if they were to pay a monthly mortgage payment on that same house. This statement alone highlights the harsh reality of the situation.

As for the political climate, it would appear that the issue regarding the excessive housing shortage across the UK and including here in Northern Ireland has taken precedent over fears around Brexit. There are not enough houses being built per year per head of population which means that the problem will become exacerbated year on year.

In summary

Unfortunately this is not an article on how to serve up peaches and cream. It is based on reality, on today and on the world we live in. There are always going to be factors on how we think, make decisions and take action and if I could offer you one piece of advice it is simply this. Take your circumstances as you find them, understand the environment around you as it is now and make a plan based on the facts as you know them because there are too many variables to count and the future is unknown.

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