Most of us aspire to better
ourselves in one way or another. It is a human trait that has existed since man
took his first breath. For our caveman ancestors it might have meant a bigger cave,
a safer spot, a more elevated position, or perhaps even a sea view!
Fundamentally it was about well-being and survival. Today home ownership is not
a survival issue; it is however about financial security as we endeavour to put
a ‘roof over our families head.'
It is one thing being a home owner, but what about a multiple home owner and investment landlord?
There are currently more than
2 million private sector landlords owning approximately one in five UK homes!
Government statistics indicate that this will increase to one in three homes in
some parts of the country. The trend towards renting locally is slightly higher
than the national average. It is inevitably skewed by 'poor' wages leading to
lack of affordability. Supply is also constricted by second home ownership and
limited new house builds. This hints at the entrenchment of the trend towards
renting.
If its financial security that you are looking for then
history would teach us that there is no better investment than property. After
all an investment in bricks and mortar should be, ‘safe as houses’?
In 1966 my parents bought their house in Redannick in
Truro for the princely sum of £3000. In 1990 it sold for £88,000. Checking the 'Zoopla House Price God', that same
semi would conservatively be worth more than £250,000 now. Even allowing for
inflation this represents a significant net gain.
Few of us will take any joy in the fact that a great number
of hard working people cannot afford to buy their own home, let alone invest in
a second or third. As individuals there is little we can do to influence this.
Inheritance, luck, choice and the lottery of life determines these things.
The opportunity of being a landlord does not make for bad
people or money grabbing capitalists. It gives ordinary people a calculated chance
for financial stability and to control their own investment destiny. Further,
by buying property locally, and becoming a landlord you have a chance to ensure
its quality and fair rent for the current generation of tenants - your
children, grandchildren, friends, neighbours and acquaintances; you also enable
them to put a roof over their heads. What is more, your investment down the
track, may even enable your children to raise a down payment on a mortgage and
continue the cycle of home ownership that is currently beyond the reach of
many.
The choices to make and the rewards to gain are
significant ones. Do I downsize and
release equity to purchase? What do I do with the pension money I have earned
from a lifetime of working? What do I do with inheritance money? Do I forgo the
foreign family holiday for the next 5 or 10 years? Do I put the kids through
private school? OR - Do I buy a rental property?
These decisions are ‘tug of war decisions’. There are
upsides and downsides to each. There is no right or wrong answer; what is
important, is what is right for the individual. History is never a certain
indication of a trend continuing. However house prices in the region are
reckoned to go up at least 20% in the next three years (Savills Quarterly
Report). The rental sector is growing too.
The difficult choice may be made easier if you consider one
certainty. No one is going to look after your interests, your health, and your
wealth in old age better than you.
Take the plunge and become a landlord. The water is lovely and warm.
Next Time we look at what makes a good landlord
