Charcol report finds that buy-to-let market set for decade of further growth
The report found:
– Report* forecasts 8 – 12% jump in number of properties bought to let
– Two thirds of landlords are in the market for a decade or more**
– Recent yield dip due to reverse next year as rents edge up
Charcol’s report, ‘The Changing Face of the UK Landlord’, takes a comprehensive look at today’s buy to let sector, and uncovers a number of social and economic factors which will drive growth over the next decade. These factors include: a shortfall of over half a million properties available to purchase, first-time buyers leaving it later, an 8% rise in the student population, 1.2 million more single households, an increasingly flexible job market, new tax-efficient property investment opportunities, and more competitive mortgages.
To complement the report, Charcol commissioned a survey of buy to let appetite among the population at large, which reveals that a massive 3.3 million (7%) UK adults are considering buying property specifically to rent out in the next 12 months. But far from being a fad, the report shows that nearly two thirds of buy to let investors are in the market for at least 10 years**, and three quarters (75%) of existing landlords plan to rent out more property within the next decade.
Ray Boulger, Charcol’s Senior Technical Manager comments: “There’s been plenty of speculation about jitters in the buy to let sector, but a convergence of socio-economic factors suggests strong prospects over the next decade, and two out of three landlords say they’re in the market for at least this long. The reasons for the recent yield dip are clear, but as Base Rate peaks, the housing market steadies, and rents edge up, landlords will enjoy healthier returns.”
Some more findings from Charcol’s report:
– Around half of all landlords are currently buying their property on a mortgage;
– 36% of UK buy to let investors are female, and one in eight is aged under 35;
– Four out of ten buy to let investors live in London or the South East, while almost a third live in the north of England (22%) or Scotland (9%).
Boulger concludes, “We believe one of the biggest triggers for market growth will be the ability to house your buy to let property within a pension scheme from April 2006, and thus attract significant tax relief. The growth potential highlighted in this report spells great news for buy to let investors, especially those on a mortgage, since any long-term rise in their property’s value will be magnified by gearing. And whereas a decade ago the margin between buy to let and residential mortgages was considerable, in some cases it is now less than a quarter per cent – we can only see this lender competition stimulating the sector still further.”