Buy-to-let indices are disingenuous and mislead amateur landlords into believing it is easy to make money, a new index shows.

Brian Hall, founder of the Model Works, a new body to produce accurate housing data, hit out at existing indices from LSL Property Services and BM Solutions.

He points out that most indices omit a series of crucial data including void periods, cost of arrears, management charges and a comparison with investments other than property.

He says “Yield calculations need to consider the gearing of the mortgage, interest rates, cost of funds and comparisons with other investment areas on how much money could be made elsewhere.”

Hall says there is a lot of inaccurate information in the market being recycled by property television programmes.

He says: “Everybody believes it is ultra-low risk and ultra-high return with the Association of Residential Letting Agency still quoting figures of more than 20 per cent return on a geared investment.

“It’s disingenuous and the buy-to-let sector is unregulated so they can publish what ever they like. All the indices can produce different results and it does not matter because there are no standards.”

Read the full story at Mortgage Strategy

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