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How to beat the credit crunch in 2008 - 31 January 2008

Experts from the Homebuyer and Property Investor Show have revealed their top tips for UK property investment in the current climate.

Buy at auction

The popularity of buying property at auction has boomed as homebuyers and investors realise they could pick up a bargain at auction and now, perhaps more than ever, is a great time to negotiate a bargain at auction. Approximately 50 per cent more properties will be offered at auction this year compared with five years ago.

David Sandeman, Managing Director of the Essential Information (E.I.) Group, which covers the whole of the UK and sets the industry standard for auction information, has been watching the market for 20 years.

Sandeman comments: “In a slowing market, vendors are polarised into two groups, those that have to sell and those that don’t. The first group often finds that selling at auction is the best option for a quick and guaranteed sale. In addition, a relatively high number of repossessed properties will also come under the hammer in 2008 due to the tighter financial climate. With fewer buyers expected this year than in 2007, there are some excellent bargains to be secured as properties will be sold at prices that would have been below reserve compared to last year’s standards.

“Over 20,000 residential properties sold at auction in 2007, a 13 per cent increase on the previous year and an even greater increase is expected this year, offering buyers a huge amount of choice. Buying at auction has become a lot easier for investors of all levels of experience and now is a good time to take advantage of the market.”

Buy now

With more sellers than buyers, we have entered a buyers market, making now the perfect time to buy property. Novice and short term investors are looking to sell, while potential first time buyers are sitting on their hands until they are more confident in the state of the market.

Property prices are already seeing slight drops in some areas. Investors purchasing now can negotiate a better price, take advantage of increased rental demand and higher rents and benefit from predicted falling interest rates which will make repayments lower than they were last year.

Simon Zutshi, Founder of the Property Investors Network and Homebuyer and Property Investor Show exhibitor, comments: “Investors should not be mistaken. With the current market conditions, 2008 is a fantastic time to buy property. The market is expected to bounce back and long term seasoned investors can look forward to excellent returns and strong capital growth. All that is needed is a well thought through personal strategy, as well as strong negotiation skills.”

Buy multi-lets

The most profitable investment property at the moment is a multi-let house for professional renters. Investors buying a terraced or semi detached house with three or more bedrooms can rent each room out separately and obtain a slightly higher rate by charging per person. However, landlords choosing this option must check whether they need to comply with the Houses in Multiple Occupation regulations.

There is very high demand for this type of rented accommodation from young professionals who are not in a position to buy and want to be within easy distance of work and local services and entertainment.

Simon Zutshi comments: “Multi-lets are currently beating student and family lets when it comes to profitability. If planned carefully, the income should not only cover the mortgage and expenses, but also turn a profit.

The Homebuyer and Property Investor Show is taking place at London's ExCeL from 7th to 9th March.

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