Today I saw an article about a report which is about to be published by “Professor Michael Ball.” ( Isn’t he a singer??) Anyway, this chap is a government adviser and provides facts and figures within the property sector. He apparently thinks rental property is a bad investment. He said;
That current returns for landlords are so low that property investors would have done better to put their money elsewhere. Because landlords are not making enough from their investments, it is restricting the amount of new accommodation available to meet increasing demand. There is a serious risk of landlords “disinvesting” in the sector either by leaving it entirely, or by not investing in the upkeep and improvement of their properties.
In my experience, tenants whinge when the slightest thing goes wrong so it’s unlikely that things will not get repaired. However, some of what he said has merit.
Now, as you know, I have been banging on about diversifying some of your money out of property for some time, that does not mean though that I think property is a bad place to invest. It’s not. However, I do believe property investing at the moment is no place for beginners, there are just too many factors that can go wrong in the current market.
Property is only one place to invest. Anyone who considers themselves an investor should be looking at several places to spread their money out and hence diversify risk. Have a read of our investment pages for some great ones we invest in ourselves.
Government Advice
The problem with having an academic advise at government level, is just that. He’s an academic, not an investor. You can only truly understand something by doing it, not by analysing facts and figures.The report only contains data from 200 landlords. Not exactly an exhaustive study then. He states that the tax burden on landlords is approximately £1,000 per dwelling when all costs including finance and agents etc are taken into consideration. It does not say over what term that figure was taken though, or what level those landlords are- experienced or not?
Costs are subjective and can be cut considerably by having the right tax and and other advisers on your side before you even start investing. Professor Ball says that rent yields are low- well again, for what type of rental and where? Rental yields vary hugely depending on area, type of property, type of rental and a myriad of other factors. Some are very good indeed.
If you are smart with property investing what it can do is provide you with long term wealth and lump sums to invest elsewhere.
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