Buy-to-let winners and losers

Soaring house prices have drawn in investors

The massive boom in buying homes in order to rent them out could have reached its peak.

But while some are content to sit tight, others are already baling out.

Stewart Williams shuns pensions and investments

One of those who dived into the market last year was Stewart Williams, 26.

The rent for his open-plan one-bedroom flat in Manchester city centre is £800 a month, and the mortgage is only £550.

So he is on a nice little earner, both in rental returns and on his capital.

He bought it for £135,000 a year and a half ago and flats like it are now selling for £160,000, he told BBC News Online.

He said: "I am not particularly interested in pensions or investments, but I am very interested in the capital growth and also the profit from the rental income in buy-to-let."

Scare stories

He rented out the flat just four weeks after moving out.

He said: "A one-bedroom flat appeals to singles and couples and it's near the centre of town so it's convenient for the bars as well as work."

He has heard the scare stories about London, but thinks Manchester is in no danger of being saturated yet and is looking for another buy to let property.

There is still room for plenty of growth in Manchester city centre

Stewart Williams

"There is a lot of new movement of people into Manchester," he said.

"I have seen people coming unstuck in London. People who were getting £1,000 a month are now getting nowhere near that.

"But there is still room for plenty of growth in the city centre, so I am not concerned at the moment.

"I think if you have bought in the right development and you have a good agent it will always do well."

He is also undeterred by talk of mortgage rates rising.

Ginty Jackson: Looking to university towns

"They may go up in the short term, but I am not going to be very concerned until there is a decision on Britain joining the euro.

"If we join the euro there should be sustained low interest rates."

But in London, where the buy to let market is close to saturation, Ginty Jackson found that buying a property to rent does not always make financial sense.

Suddenly, from being a landlords market it has become a tenants market in London

Ginty Jackson

Ginty, 35, was forced to sell a flat in London after she struggled to find tenants.

She bought her first buy to let flat in New Barnet two and a half years ago, followed by another six months later in Holloway.

Both are two bedroom flats and until this year she had no trouble renting either.

Fees and overheads

Then a few months ago she got a call from her managing agents saying she would have to cut the rent on the New Barnet flat, or face having an empty property.

The rent on the flat had been £910 a month and the mortgage £580 a month. But with the cost of the agent's fee and other overheads, she realised he was too highly geared to cut the rent.

"I wasn't really in a position to negotiate," she said.

"Reducing the rent by £50 a week was going to hit me and hit me hard."

So she decided to sell the flat while the going was still good. She got £235,000 for it, a nice profit, but she will not be going back into the London property market.

Outside London

She said: "Suddenly, from being a landlords market it has become a tenants market in London.

"The margins are still there, but you have to look to other areas of the country to find them."

It has not put her off the market completely, but she is now looking at other areas outside the capital.

She is now looking at buy to let in university towns where she says the constant supply of students means a still-buoyant market.

She said: "The fact that I know so many people that have bought that extra flat in the last year or so, speaks volumes.

"There are too many of us and I am getting out before the market goes too pear-shaped."