16 Oct

Buy to let or buy to specu-let?

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."


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