UK House prices and social changes are seeing that 20 to 30 years old are mortgage free with many finding it easier to rent. Michael Ball, Professor of Urban and Property Economics at the University of Reading Business School, forecast an average growth in numbers of Buy to Let tenancies of 20-30,000 a year over the next ten years.
In 1994, 55% of all mortgages were for first-time buyers. Today, that figure is 36%. What is more, the average age of first-time buyers is nearly 30, which is higher than it has been in previous decades.
The Association of Residential Lettings Agents (ARLA) which was formed in 1981 as the professional and regulatory body for letting agents in the UK reports that Buy to Let has spread. The private rented sector now covers areas that had little or no private renting before. This has had the knock-on effect of reviving housing markets and assisting in inner city regeneration
Without Buy to Let, the ARLA 10 year report asserts, the Private Rented Sector would be a lot smaller. A shrunken Private Rented Sector would have provided for less choice in housing and standards would have suffered. Competition between landlords in the provision of rented property has brought considerable gains to households in rented accommodation. This is one of the reasons why more people rent.
Nicholas Marr CEO of Homesgofast.com ‘ some may say that it was the insurgence of the buy to let market that has caused spiralling house prices which has priced first time buyers out of the market , however not having a mortgage in your twenties gives a sense of freedom and appears to be part of social change in the UK’
The benefits of renting appeal particularly to young mobile people. Changing lifestyles, affluence, employment patterns and financial circumstances have combined to encourage more younger people to rent rather than own their homes, as they may have done in previous decades.
A report by ARLA earlier in the year indicated that a high proportion of property investment landlords have been active in the buy to let market since 2000. They hold an average of five properties, although this polarises between the 53% who have only one or two and the 10% who have more than 10 properties. These investors have been landlords for an average of just under six years with 15 percent having more than ten years' experience in the market.
Virtually half of all respondents say that they have invested in buy to let properties to create a nest egg. 43% look for rental yield as well as capital appreciation but only 6% have invested solely for the income. A negligible number, just 2.7%, invest for short term capital gain.
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