James Fitzsimons: Protection came just too late for buy-to-let investors
As prices in the capital rise, James Fitzsimons thinks maybe it is a good time to get back on the acquisition trail
Thousands of buy-to-let property owners are in negative equity, and even bankrupt, because they invested in bricks and mortar to support them in retirement. Some didn't fully understand what they were doing and if they had doubts, they were dispelled by banks and brokers. Now there are tens of thousands of buy-to-let properties in negative equity. Their owners can't face up to the problem and the banks refuse to take responsibility for their part in its creation.
REITs (Real Estate Investment Trusts) have arrived. They will help reduce risk by adding structure and better controls. We have an appetite for bricks and mortar but property funds such as REITs could have protected investors from negative equity. The cute hoor mentality may be gone after so many people were burnt in the past. We'll have to do things differently from now on. I have a few suggestions.
As property prices in the capital start to rise, maybe it's time to take stock of what we have and get back in the saddle before it's too late. There are already new tax incentives to encourage more investment. REITs provide an alternative to personal property ownership and will bring in funds from abroad. They are here to make the repossessed NAMA properties viable, too. The key for investors, this time, is to make better and informed decisions. Those who took chances will eventually pay for their mistakes. Landlords are being wiped out as merciless banks send in the receivers.