Saturday, January 7, 2012

While the government frets about social housing, private rentals soar

Mortgage squeeze fuels surge in buy-to-let investors

The share of residential housing stock owned by private landlords has jumped more than 40pc since the financial crisis, and now makes up almost a fifth of the total, according to estate agent Savills. [Yes, one in five homes in this country is now a privately rented home.] The tighter lending standards introduced by Britain's banks since the crisis have created opportunities for some investors, as the pool of potential homebuyers shrinks. And, according to Savills, rather than the house price appreciation that lured investors during the boom, it is the prospect of rising rental income that is proving attractive. The volume of mortgages handed to private landlords jumped 16pc to £3.8bn in the third quarter of last year, according to the Council of Mortgage Lenders.

Posted by drewster @ 12:42 PM (2063 views)
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7 thoughts on “While the government frets about social housing, private rentals soar

  • mark wadsworth says:

    “Almost a fifth” is probably a wild exaggeration, it has crept up from 9% to 12% or something over the last ten years, it’s hardly likely to have increased to 20% in the past two or three years without anybody noticing.

    To put it bluntly, that would mean that BTLs bought 8% of privately owned housing = 2 million units in three years = 700,000 a year = more than all houses which were bought and sold in the last three years.

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  • Are BTLers not affected by mortgages being squeezed? OK, they’re probably older than your average FTB so will have bigger deposits to lose. Bring it on. Meanwhile, rents are going up at an eye-watering 1.571% per annum.

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  • Support for the view that we are amidst a gradual return to pre-war times in which the housing stock is owned by a small proportion of the population, like the land.

    Steeled myself to go into an estate agents I know. Prices at peak levels, shortage of stock relative to demand, advised me to go into BTL; to which I said I didn’t see much point in buying a house to let if I wasn’t prepared to buy one to live in. (Gross yields 5 – 5.5% apparently.)

    I’m beginning to wonder whether prices will ever drop to a sensible level in the southeast. If gilts suddenly fall (could happen) then perhaps they will, but here we sit in a quasi-stable nightmare in which the pack of cards tumbles except for the high-value cards that just go on floating. What a country!

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  • sibley's b'stard child says:

    Exactly phd, last I heard the average BTLer at the moment had 40% deposit so plenty of haircuts all round.

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  • Where will future house price growth come from for the non BTL properties?

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  • There’s a fascinating anecdote in the Telegraph comments:
    “Due to being in temporary employment with large deposit, I am not eligible for a residential mortgage. Yesterday I was advised that the only mortgage available to me in my current circumstances is a buy-to-let mortgage. Buy a house, put a friend in one room and then say ‘oops I have to move from my current house’, then move in to the buy-to-let and say it is my primary home. The only downside is the initial costs are £2k not £1k.”

    This may well explain the increase in so-called buy-to-let lending.

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  • crash bandicoot says:

    Is the percentage increase in landlord ownership of housing down to an increase in the numbers of accidental landlords? I know two people at work who are renting out their old houses “until the market recovers” while renting another house to live in. This interestingly changes their status from owner occupier to both landlord and tennant which may confuse the numbers slightly too.

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