Buy to let

Purchase for rent

Buy-to-let isn't yet dead: Real estate funds managers where he invests. Hearthstone's investment managers believe that despite the dramatic profits of the last two years and the risk of interest rate hikes, there is still a lot of cash to be made. Surprisingly, those who have observed how buy-to-let has taken a blow in the last three years - and the real estate markets have been slowing - may be surprised.

It has abandoned the industry railing and many hosts have decided to trim their loses and end buy-to-let forever. However, there are those who claim that the UK rental market is still profitable to invest in. Have a look at the news and you would be forgave to think that the investment in privately leased real estate is toast.

We see potential investments in areas such as the Midlands and Northern England, where salaries have kept up with real estate values. While there has been some recent consideration about a Post-Brexit housing bubble, the potential 35 per cent drop in housing bubbles proposed in the Bank of England's Extreme Burden Test Scenario is twice as large as after the 2008 overall finance bubble.

Clearly, this worst-case is not a general expectation: in the Ministry of Finance's recent poll of sovereign forecasters, only one predictor forecast a 3 per cent general fall in property prices this year, with no forecast of reductions in later years. Nevertheless, tenants' demands remain stable. Our search is for sites with good rent demands and an attractive retail trade.

We then look at the unavailability and nature of the accommodation, the prospective rent request and the lessee profiles we could address. These informations inform our real estate research. We currently see the Midlands as a particularly powerful buy-to-lease upside. There are several London real estate holdings and, despite numerous recent figures indicating a decline in real estate prices in the UK capitol, we have not found any impairment by our external appraiser.

It is our intention to keep the majority of our investments in London in order to benefit from buoyant rentals. Even though parts of the residential property markets are muted, there are many possibilities for purchasers and vendors.

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