Barely a day goes by, it seems, without new evidence emerging with positive overtones for buy-to-let. Yesterday brought the news that Sainsbury's Bank research had found that the total value of buy-to-let property in Britain had soared in value by £69.5 billion in the year to November 2007.
Today brings another important finding, showing that the demand for rental property is growing because the number of people living in it is on the rise.
Halifax Bank of Scotland announced today the findings of research, based on government figures, which reveal that in 2007 there was a record drop in English owner-occupation. Moreover, while there were 83,000 less households of this kind, the year saw the number of renting households increase by 107,000.
This was the second successive year that the homeowner share of England's housing stock had dropped, which suggests it is not a blip. Indeed, longer-term statistics have been particularly revealing. The last five years have seen an overall increase of 85,000 owner-occupied homes, compared with 697,000 in the previous five. Meanwhile, rental households have risen 483,000 over the same period.
While various factors might be considered as contributors to the situation, the demographic and geographical affordability factors were noted by Halifax chief economist Martin Ellis. While the north saw 345,000 extra owner-occupied homes between 2001 and 2006, London shed 111,000. In the same period, the lowest regional increases were in the south-west (21,000) and the east of England (28,000).
Add to this the fact that the biggest drop in homeowners was among households of 16 to 44-year-olds between 2005 and 2006 (235,000) and the age and location factors become clear. Mr Ellis stated: "The figures for owner-occupancy clearly demonstrate that these affordability issues are most pronounced amongst younger people and in southern parts of England."
The clear conclusion to draw is that young people and those living in the south, particularly in London, make up a growing market for buy-to-let investors. Moreover, as long as affordability is an issue in these areas and amongst this group, it logically follows that the situation will persist. What is absolutely clear, however, is that the need for such accommodation has risen exactly at the time that affordability has worsened.
Of course, affordability may improve in the coming year. This week Michael Coogan, director general of the Council of Mortgage Lenders, suggested that while 2007 had been a worsening year for affordability 2008 would be better. He said: "For first-time buyers, the combination of subdued house price inflation and lower mortgage rates means affordability should ease slowly as the year progresses."
However, this view is not shared universally. Property website Hotproperty.co.uk warned this week that its poll showed that the recent base rate cut had not yet restored the confidence of investors in the market market as much as had been hoped. Not only had 40 per cent not had their confidence boosted by the cut, but of the 60 per cent who had, less than a third were planning to re-enter the market as a result.
The website's managing director Shawn Luetchens commented: "This is possibly because the immediate benefits of a bank rate cut aren't automatically passed on to the consumer. Mortgage lenders base their rates on a range of factors; a decrease in the bank rate doesn't necessarily mean a market-wide shift in lending rates."
With continued uncertainty, it may therefore be some time before first-time buyers feel able to come back to the market in large numbers. In the meantime, they will have to live somewhere, a need which it may remain the task of buy-to-let to fulfil for some time yet.
In today's world Property investment is an excellent investment option especially investment in UKAbout AuthorJim Barnaby is a real estate investment broker and successful property investment adviser delivering research and selected UK and overseas property investment solutions with experience in spanish properties, french property investment, German property, Cyprus holiday homes, Property in Cape Verde, German property investment, cape verde property buy to let property
Source: ArticleTrader.com
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