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Is buy-to-let investment poised to rebound in 2019?

Could buy-to-let be THE contrarian investment sector to buy into right now? Concerns over the health of the housing market mean that home purchases for rental purposes have basically dried up, while a great many landlords have been selling up amid fears of a property price crash. Fresh data, though, suggests that the market may be about to improve.

A survey of 500 landlords and real estate investors carried out by Experience Invest revealed that 39% of respondents plan to increase the size of their buy-to-let portfolio in 2019. This compares with the 11% who expect to reduce the size of their holdings.

Of the remaining participants, 35% said that they plan to neither buy or sell property this year, while 15% disclosed their intention to sell some existing bricks-and-mortar assets to then reinvest in new properties.

Where are the investing hotspots?

Also surprising was that respondents to Experience Invest’s poll seem to dismiss fears that the London property market in particular is in danger of sinking.

Some 35% of those who said they are intending to buy this year told the property investment specialist that they were intending to buy in London in 2019, putting the capital city in top spot on the list of most popular cities. And as a region Greater London also claimed prime position with 37%.

The North West of England was the second-most popular region on the list, with 30% of real estate investors intending to invest there this year. Manchester and Liverpool, which commanded 33% and 25% of respondents respectively, came in in second and third place respectively in terms of the most attractive cities.

Source: Experience Invest

Is landlord appetite recovering?

I can certainly see why many respondents to Experience Invest’s poll would be feeling upbeat right now. Because of the outflow of landlords over the past couple of years, the UK’s already-bulging shortage in rental accommodation has worsened still further, in turn pushing rents ever higher.

Latest data on buy-to-let lending suggests that a recovery in appetite is yet to become apparent, though. According to UK Finance, mortgage products taken out for rental purposes fell 5.6% year-on-year in December to 5,100. Addressing the causes for this decline, Jackie Bennett, director of mortgages at the body to commented that “demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes.”

It wouldn’t surprise me one bit if buy-to-let demand continues to languish in 2019. Those cost increases and regulatory hurdles aside, the peril that Brexit poses to the homes market — whether it be in respect of an economically-destructive ‘no deal’ withdrawal, or a prolonged Article 50 extension lasting months or even years — threatens to continue sapping landlord appetite in the near-term and beyond. I certainly don’t believe buy-to-let is an attractive investment class right now; I’d rather put my money to work elsewhere.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.