Buy to Let

With the stock market in the doldrums and interest rates going backwards, pension funds and investment managers are looking for new ways to find bigger returns for their clients. Many of them, says Nick Muncey from Cambridge consultant surveyors Januarys, are turning to the buy to let market.

"With a widely held perception that the residential property market could be over the worst, many institutional and larger investors are seeing at this as the perfect time to get involved. House prices have fallen around 20 per cent since the peak, which makes them an attractive long-term prospect for making capital gains. When you combine that with returns of around 6%, the whole package becomes a serious proposition."

Already, two large firms are getting involved. Legal and General is planning to contribute £1 billion to a "build to let” scheme through a residential property fund. Fund manager Schroders, meanwhile, has committed to fund a housing development in Croydon and is preparing to launch a fund to provide seed investment for further projects.

"The benefits of such large-scale investments are clear," says Nick. “They have huge economies of scale, government support and none of the mortgage finance constraints suffered by amateur investors.

"Whilst average yields are around 6%, buy to let in the right areas of the country can yield up to 10%.

"The picture is as strong locally as it is nationally. Here at Januarys, we're already advising several large clients on the potential of investing in buy to let in Cambridge and the surrounding area. I fully expect that number to increase in the months to come."