16
Oct
Buy to let or buy to specu-let?
The term buy to let is a misnomer that does not truly reflect the
arrangement that investors are embarking on, it has been
claimed.
According to Paul Holmes, chief executive of Firstrung, the
practice would be better termed "buy to specu-let", because
investors have to hope that the rental income they accrue will
cover their mortgage repayments.
Mr Holmes went on to claim that the advent of interest rates of
above five per cent has made buy to let investments far less viable
than had previously been the case.
He said: "Buy to let has been a misnomer. I have always said buy to
let should never have been called buy to let, it should have been
called buy-to-specul-let because once rates reach five per cent, if
you had £100,000 borrowed, you need at least £500 a month
coming in to pay back the loan."
"When rates reached five per cent, which was a while back...for me
that is when the buy to let phenomena died."
