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Why long-term is a golden rule

Written by Jim Barnaby

Monday, 17 March 2008

On the day before the Bank of England monetary policy committee announces its latest interest rate decision and with the budget just a week away, it may seem a slightly strange time to think about the long-term. Yet for those involved in investing in property, some things are far from ephemeral.
Providing her top tips on what to do and not do if investing in buy-to-let property, Sylvana Young, chief operating officer at property portfolio management firm Young Group, listed the notion that it was possible or desirable to invest in the expectation of a quick return as the top "don't" in the list.
She said: "Don't expect to get rich quick - UK property investment should be approached with a long-term view. It is an asset class that in the medium to long-term has outperformed all other asset classes and I would encourage people to build a sustainable, appropriately geared portfolio over a number of years."
Coming in addition to advice such as ensuring properties are researched well before buying and that the location is close to amenities such as restaurants and public transport, Ms Young's point echoed advice that has not only been given frequently but is also now practiced by most investors.
Examples of this are many. The Association of Residential Lettings Agents' (Arla) survey in January illustrated that most were keen to make their ventures ones of extensive duration, with nine out of ten saying they would not sell up their property for at least ten years. The average investment lasts nearly 17 years and just two per cent plan to be in the business for less than two years.
Furthermore, clued-up investors have often worked out for themselves how long-termism can work. Shortly after the Arla survey came out Angela Cook, an investor from Newton Aycliffe in County Durham, explained to the Evening Gazette why her investigations had persuaded her that a buy-to-let investment lasting many years was a better bet than a pension.
She said: "Before I entered the market, I did a lot of research dating back to the 1950s and found that, in general, every ten years the market value doubled and then suffered a slight dip."
Then there is the recognition that this sort of behaviour is sustaining the buy-to-let market, with Nationwide senior economist Martin Gahbauer recognising that as a result "the long-term investor is in a better position to ride out temporary periods of weak capital gains" than those looking for fast returns.
Such recognition of the advantages of this level of commitment indicate the clear advantages of this investment strategy. The advice given by Ms Young simply reinforces the message.
Tomorrow may or may not see an interest rate cut, though most suspect not. All eight experts who spoke to Adfero recently tipped no change, while New Star Asset management broke ranks with that consensus this week and predicted the unusual move of the monetary policy committee trimming the base rate two months running.
Next week may see a range of new measures in the budget concerning the property market, from stamp duty to green homes initiatives. But whether such changes take place or not, it seems one of the ultimate issues for investors will stay much the same.
In today's world Property investment is an excellent investment option especially investment in UK

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About The Author:

Jim Barnaby is a real estate investment broker and successful property investment adviser delivering research and selected UK and overseas property investment solutions with experience in spanish properties, french property investment, German property, Cyprus holiday homes, Property in Cape Verde, German property investment, cape verde property buy to let property

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