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Buy-to-let mortgage lies exposed

Date: Tue, 26 June 04 Analysis

Estate agents are regularly boosting estimates of the returns likely from rental properties in order to hook the buy-to-let market.

The industry broker Landlord Management conducted covert research, first as prospective landlords, then as tenants and discovered an average deception of 8.5 per cent across the country, with London investors being quoted returns in excess of 18 per cent of the actual likely income.

"These results highlight how essential it is for landlords to undertake extensive research before choosing a particular property or area," said Landlord Management's managing director Lee Grandin.

He noted that "if investors in London, Birmingham or Glasgow had relied on an agent's advice they could be left facing a rental shortfall of over ten per cent, or even worse face extensive rental voids due to oversupply of similar apartments".

Responding to the research, Tim Hyatt from property consultancy Knight Frank told The Times newspaper, however, that the letting could benefit, nonetheless, from the general slowdown in house prices: "[A positive] change in sentiment could trigger renewed interest in the buy-to-let market as investors begin to see tenant demand improving and yields moving upwards."

While London and Birmingham agents proved the most deceitful, those in Leeds and Sheffield were the most honest, quoting the same rent to landlords and tenants.

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