Alan Collett, manager of the TM Home Investor Fund, has claimed the buy-to-let market is not dead and still holds opportunities for investors.
Despite rising interest rates, the withdrawal of tax relief on mortgage interest and a stamp duty surcharge, Collett said the private rented sector in the UK is still worth investing in.
He told This Is Money that rising interest rates may not be all bad news and may actually herald house price growth.
“There has been some recent speculation about a post-Brexit house price crash, but the possible 35% fall in house prices suggested in the Bank of England’s extreme stress testing scenario is twice as large as after the global financial crash in 2008,” he argued.
In the Treasury’s latest survey of independent forecasts, only one forecaster predicted an overall house price decline, of 3% for this year, and none predicted declines in subsequent years.
Moreover, although residential property markets do suffer in a crash, the sector’s defensive qualities relative to equities and commercial property would apply to a Brexit-driven crisis.
Collett also pointed out that tenant demand remains resilient. A fifth of all UK households pay rent and that number is expected to grow due to increasing longevity and population growth.
RICS recently predicted that rents will increase by nearly 2% over the next 12 months and 15% in five years.
“We all need somewhere to live and the varied picture across the UK, in terms of house price and rental income growth, suggests a positive outlook for investors,” Collett said.
Collett sees the Midlands as a particularly strong buy-to-let investment opportunity.
The fund recently increased its investment in a housing development in Nottingham.
It also invested in eight new houses in the South East near Colchester.
“We hold several properties in London and, despite much recent data suggesting house price falls in the capital, have seen no reduction in value reported by our independent valuer,” Collett added.
He said the fund intends to keep most of its holdings in London to take advantage of strong rental demand.