Accountants’ Buy-To-Let Client Offers Sound Advice

A buy-to-let landlord client of Surrey accountants TWP has highlighted the importance of a good business plan and a long-term approach for operators in the sector as the housing market continues to slump.

Murray Macgregor, who owns ten properties in the London area, appears on the BBC News website in a feature on the falling price of flats in the wake of the credit crunch. This month, Nationwide published a survey reporting that house prices fell by 15.9% in 2008, the biggest decline since it began publishing its index in 1991.

Murray began building his portfolio in 2000 after deciding to recent out a property he owned instead of selling it. At the time, rent to mortgage repayment ratios delivered healthy profits but he says that in the last two to three years in the London area, rents have struggled to cover repayments and other costs associated with buy-to-let properties, such as agency fees.

He stresses that buy-to-let investors need a robust and realistic business strategy – as does any business – to see them through tough times and says that developers’ incentives have contributed to too many people snapping up buy-to-let properties without looking at the bigger picture, leaving them in a weak position in the current economic climate. On the plus side, he says buy-to-let landlords have helped to regenerate significant numbers of properties.

Murray says that taking a long-term view is crucial in the buy-to-let sector – something many property investors have failed to do, leaving them financially vulnerable at a time when they can only sell at a poor price. He says: “If you are a forced seller, you are always going to be in a weak position. I have never been a speculator, I am a long-term investor.”

TWP partner Andrew Goddon says: “Murray’s pragmatic approach is an excellent example for any prospective buy-to-let investor. Property investment needs to be approached in exactly the same way as any other business, but unfortunately many buy-to-let landlords have failed to recognise that property has traditionally been a long-term investment. Anyone considering entering the buy-to-let market would be wise to seek advice from a professional adviser, such as an accountant, so that they are fully aware of key issues before committing themselves.”

A short video featuring Murray can be seen on the BBC News website at http://news.bbc.co.uk/1/hi/business/7661303.stm

For more information, contact 01932 704700.