News Review: Buy-to-let
Culture shift in UK from buying to renting
by Alex Hammond, PR, brand and communications manager at Kensington
news coverage around buy-to-let at the moment highlights that there is a definite trend emerging among the
British
population, for people to live in privately rented accommodation. according to the communities and Local government’s
widespread
decrease in the number of owner-occupied households from a peak of 14.8 million in 2005-06 to 14.5 million in 2009-10, saying that the proportion of households in owner-occupation has been in decline since 2003, falling from 70.9% to 67.4% during the period. and this trend is reflected
english
Housing report, which received
coverage last month, the number of households renting privately has risen by one million, from 2.4 million to 3.4 million, since 2005. the report
that privately rented accommodation
says now
accounts for 15.6% of all households in england, up from 14.2% in 2008-09 and 11.7% in 2005-06. it adds that there has been a
in the latest edition of Parag on group’s Private rented Sector trends report, which says that tenant demand hit a two-year high during the fourth quarter of 2010. according to the report,
four out of 10 landlords said tenant demand grew during the quarter, compared to 36% during the third quarter, which means the proportion of landlords reporting growing levels of tenant demand has now risen for six consecutive quarters. While interesting, by now
this type of data is nothing new. industry commentators have been predicting a shift in uK housing patterns towards renting privately for some time now and
Market outlook 2011
The year has got off to a good start with new products from lenders that want to lend and help investors make the most of the opportunity. Competition is creeping back into the market and it looks as though 2011 will build on the good year buy-to-let had in 2010 when it grew by 7%, according to data from the Council of Mortgage Lenders. The CML says at the end of the year there
were an estimated 1.3 million buy-to-let mortgages outstanding worth £152 billion and accounting for 12% of the total value of mortgages outstanding. It adds that the total value of buy-to-let lending in 2010 was £10.4 billion – 22% higher than in 2009 – and the
10 mortgage introducer APRIL 2011
many have cited a more european model for living as a framework for housing in the uK. Which is why it was interesting to see a focus on the german rental market in The Guardian last month and, while not directly linked to the buy-to-let in the uK, it is probably worth dwelling on this for a moment as it could indicate future trends for our rental market.
according to The Guardian
the tenant is arguably king in germany where just 45% of homes are owner-occupied. tenants enjoy far greater rights and protection from poor landlords, eviction is virtually unheard of, and both sides have to give each other three months’ notice to terminate a tenancy agreement. For the landlord, this rises to six months once the tenant has stayed in the property for five years and nine months after an eight- year rental. on average a tenant spends three to seven years in one property,
total number of loans advanced in the year was 102,000 – 10% higher than the previous year.
Looking ahead to the prospects for the buy- to-let sector in 2011, the CML expects strong rental demand to remain. This will provide the engine for the market and if lenders can continue to innovate with new products that provide the fuel, the growth of buy-to-let could motor forwards to meet increasing tenant demand. We may never be as tenant-friendly as Germany, but if economic and demographic trends continue on their current course, it promises to be a very landlord-friendly environment. And that is good news for mortgage intermediaries.
much longer than in other countries. So is this the way the uK
is headed? Perhaps in the future but what certainly is true is that falling supply of rental properties and strong tenant demand are impacting today’s market, which is good news for landlords. according to the latest
ricS residential Lettings Survey, 40% more chartered surveyors reported a rise in rents rather than a fall in the three months leading up to January - which is the highest positive reading in the survey’s history. and, as rents have increased, gross rental yields have also risen sharply - they have now increased in each of the last four surveys. ricS says the supply
of rental property to the market continued to decrease during this period, with 4% more surveyors
reporting
decreases in the three months leading up to January. it adds that the percentage of stock from private landlords has fallen from over 80% before 2009 to around 70%. Looking ahead ricS
says surveyors remain positive that the market will remain buoyant, with 37% more predicting rents will rise rather than fall over the three months leading up to april 2011. all areas of the uK expect rents to increase with relatively modest rises in the South West but much more notable increases in London.
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