The property market is notoriously precarious at the moment. House prices have been dropping on an unprecedented scale and nobody is able to sell. For one group of people this is a good thing. For those who do still have the money to buy, property can be picked up a lot cheaper than in the previous year or so. This is great for those looking for a long term investment or even a buy to let property. Many people are having to rent because of the crisis surrounding trying to obtain a mortgage and if you can pick up a cheap property that you can then let out, you should be quids in.
For those who really want to sell their properties but do not want to lose money or find themselves in negative equity, the good news is that house prices are set to rise by 25% by 2010. That's just two short years and you will not only gain back the price that your property has recently lost but some extra on top. All you need to do, is ride out the current storm.
Some institutions have been set up to help and advice people on coping with the current credit crunch and it would seem that some are just in it to make themselves extra money. Reports from the BBC have shown that a buy to let property company have been less than honest about their properties earning potential and value.
Customers have been approaching the company and purchased property that they have been told will accrue a certain rental income according to facts based on the local rental prices and demand. Once many of the owners have tried to rent out their properties they have found that this isn't actually so and that when it comes to selling they can't even recoup their losses.
This is leaving buyers in extreme financial difficulties but the company claim that many of its customers have managed to break even. Not exactly what you make an investment for now is it? The properties are often sold as being with discounted prices but it turns out that the discounted price is actually the real value. Buyers are being misled into the value of the property and are being mis-sold what they take to be a bargain that they can make money on. On top of this the company made 2,500 pounds from each investor with property seminars on how to make money from renting.
This does not just apply to UK property. The company have also sold overseas buy to let property with the same sales pitch and have been found wanting in the same way. The situation is so dire for some investors that they are facing bankruptcy and losing their own homes as well as their buy to let property.
The company have even been assuring some buyers that their property comes with planning permission when it doesn't, bringing untold difficulties to the purchasers once paperwork is all signed and sealed. It is widely accepted that all investments, including buy to let property investments, come with risks. However, we always expect sellers to be completely honest when we are sinking our funds into something we hope will make us our fortune in the future.
The company in question state that as buy to let property investment is a long term thing then people need to look at the bigger picture. Profit will not be discovered every month - particularly in the current climate. However, this does not explain why they would value their properties at over the odds int he hope of enticing people to invest or to mis-sell properties by claiming that they have planning permission when they don't. The best advice is to get your own surveyor on the job and secure a valuation you can trust.
Property expert Catherine Harvey looks at the risks of a buy to let property investment.