Buy Low, Rent High.(buy-to-let investments)(Brief Article)

With global stocks still riding the roller coaster, investors everywhere have been looking for havens. Internet start-ups are out; gold and bonds are back in vogue. And in major cities like London, buying a second home to let has become a popular bet. Real-estate investments are supposed to be, as the old British saying goes, "safe as houses." Or are they? While buy-to-let may have been a grand idea in a boom economy, some experts are worried that new landlords could be headed for trouble.

Already in London, the buy-to-let bubble is beginning to burst. American expat Liza Llewellyn and her husband, Stephen, had to lower the rent on their two-bedroom Kensington flat from [Pound sterling]895 to [Pound sterling]800 per week before they found a tenant. In the end, the property stayed on the market for four months. "There are simply too many landlords chasing too few tenants," says Jeremy Leaf, a spokesman for the Royal Institution of Chartered Surveyors.

Why the rental glut? In the mid-1990s, mortgage lenders in Britain began offering much easier terms for buy-to-let mortgages, which led some people to overextend themselves. By 2001, market fears encouraged even more people to invest in property, but it also meant that the most lucrative rental markets were drying up. (Since the dot-com crash, a large chunk of high-flying expat bankers, who make up 75 percent of renters in prime central London, have either

been sent home, downsized or had their housing allowances slashed.) Hong Kong, where rents fell 11 percent last year and continue to drift down, has experienced a similar crunch.

Other major cities may provide somewhat safer opportunities. In Tokyo, housing prices are falling, but rents remain stable. A ...