The financial downturn was “probably the best thing that could have happened” to this country’s private rental sector according to lettings industry guru David Lawrenson.
Writing in his latest newsletter he says the collapse of Lehman Brothers, and the subsequent banking crisis and credit crunch that started in 2008, is often seen as a disaster for the world.
But for investors in buy to let, it was exceedingly helpful he says, thanks to interest rates hitting their lowest levels while capital values eventually recovered.
Lawrenson even describes the restrictions on lending that came in as a result of the crisis as “a fillip” because it temporarily deterred new landlords and therefore limited supply with higher rents as the consequence.
“So if, in 2008, you already had mortgages that backed previous property purchases and especially if those mortgages were on base rate trackers, (as many buy to let loans were), it was very happy days indeed” he claims.
He admits that those not on the property ladder in 2008 and those who wanted to save suffered for much the same reasons as landlord investors prospered but says that every event produces winners and losers and “the credit crunch which started eight years ago was a great thing for landlords with established portfolios.”
Lawrenson insists that landlords in south east England and London in particular have dramatically regained any capital values lost during the downturn. “and the same is true of many other parts of the UK, though to a lesser degree.”
He suggests buy to let industry players should “give a big hug to the clowns on Wall Street and in the City of London who were responsible.”