Why Britain’s buy-to-let is considered a ‘safe haven’ during global financial turbulence

During the month of September in China, the world’s second biggest economy, a major collapse of the Shanghai stock exchange sent ripples of fear across world financial markets. There had not been anything similar for over a decade. To put it into perspective indices lost around $3 trillion (£2trn), the equivalent of the UK’s entire economic output during the past year. The London FTSE saw a loss of some £84 billion in just one day. Across in America, the Dow Jones Index fell by as much as 588 points. This will undoubtedly have a knock on effect right across all aspects of economy and trade. China represents 12 % of global GDP and 18 % of global manufacturing exports, so it is easy to see the potential disaster.

However, despite the financial turmoil generated in China, Britain’s buy-to-let sector is considered as a secure investment market, for several reasons:

Stock markets are by their very nature somewhat volatile, they are affected both up and down, on a moment by moment basis. However, assets which are more solid in nature such as property, gold and to a degree bonds are safer havens for investors’ money. Anything that can ride out recessions, stands a better chance of a healthy future.

Landlords wishing to rent out property aim for the long-term profit, rather than quick gains. Dips in the economic market can be ignored and safely navigated. There may even be a positive reaction in favour of seeing bricks and mortar, as a better bet than stocks and shares.

Overseas buyers still appear to be interested in acquiring property in Britain. Agents are reporting an increase in enquires, despite the China crisis.

The Bank of England may be required to keep interest rates low for longer due to a slowing growth rate, caused by such stock market collapses. This will in turn add more fire to the British property market.

In general there has been a steady increase in prices of property in the UK and similar correlations in rent rises. The rental sector continues to grow and buy-to-let mortgages are still favourable, so it seems prudent to consider buy-to-let as a viable option.

Seeking professional advice and being up-to-date with the latest information is always wise when considering making an investment, especially during times of economic fluctuations. Auction House London, brings you all the latest up-to-date economic information regarding investing in property in London.