Buy to Let Here to Stay
Iain Andrew, MD for group intermediary sales at Nationwide argues that last week’s figures out from the Council of Mortgage Lenders, confirmed that growth in buy-to-let shows no sign of abating.
“In the first nine months of 2012 almost £12bn worth of buy-to-let mortgages were agreed – 19% up on the same period last year”.
“However the simple truth is that as long as there is demand for rental property, there will remain a buy-to-let market in some shape or form – and there can be no argument that today the buy-to-let market is essential to both the short and long term housing needs of a growing number of the population”.
While some commentators bemoan the fall in home ownership levels, as financial professionals, we must remember that in the current climate, more consumers than ever lack both the confidence and the funds to buy their own home, and favour instead the flexibility that renting can provide.
The private rental sector currently accounts for 1 per cent of all housing stock and plays a vital role in support of the overall housing market.
Many people forecast that this will increase to 20% by 2015.
The key drivers of growth for the buy to let sector include a shortage of residential funding, lack of housing stock, grow population, shift in people’s attitudes towards renting and postponing major life decisions.
None of these look like they will change any time in the near future, and there is little likelihood that pressure on housing supply will be relieved – buy-to-let, as we know it, is here to stay. In the longer term the prospect for enhanced regulatory requirements for both landlords and tenants may lead to changes in the sector, but to reiterate an earlier point; as long as there is demand for rental property there will remain a buy-to-let market.
It’s not just tenant demand fuelling expansion of the rental market. Landlords’ confidence in the sector continues to grow as expectations of limited capital growth are being offset by rising rents and short void periods.
At the same time, the low mortgage rates currently available are helping to support rental income at a level which is not attainable through many other forms of investment.
The proclaimed underlying drivers for growth; constrained mortgage finance for owner occupiers and low levels of construction, show few signs of softening, signifying that demand for buy-to-let finance will remain robust – though I believe that mortgage finance is available for those that can adequately service a loan”
Article courtesy of Compliancy Service
RentPro property management software for letting agents and landlords.