7th June 2007
Sevenoaks Chronicle - Numbers of second home owners soar
Around three per cent of home owners are now thinking of buying a second property within the next two to three years, writes Caroline Wing.
The number of people hoping to own a second property in the UK is likely to double in the next three years, market research company Mintel has found.
Those planning to invest in another home are intending to cash in on the demand for rental property. They will let their second property to tenants.
Currently, around three per cent of home owners are thinking of investing in this way within the next two to three years - and if they proceed, it will increase the number of private landlords to around 2 million.
The buy-to-let market has been steadily rising over the past 10 years. Just nine years ago there were around 28,000 buy-to-let mortgages in existence, according to the Council of Mortgage Lenders.
Compare this to the 330,000 mortgages of this nature which were taken out in 2006 alone and you can see that the trend has gathered momentum at an extraordinary rate.
The number of buy-to-let mortgages today stands at around 850,000 - representing about nine per cent of all mortgages.
Paul Davies, senior financial analyst at Mintel, said: "It is clear that these days buy-to-let is no longer the exclusive domain of professional portfolio landlords. Increasingly, property owners are seeing the benefits of investing in bricks and mortar and often regard the second homes market as a good alternative means of saving for retirement.
"As long as these trends continue, future growth in this market should be guaranteed."
Of course there is a downside to the generally positive feeling generated by such news. Homes suitable for first-time-buyers are being snapped up by second home owners, thereby reducing supply which in turn leads to price increases.
Helen Adams, director of firstrungnow.co.uk points out that the situation is likely to get worse for first-time-buyers, who are already finding that the first rung on the property ladder represents an enormous climb. Starter homes sell so quickly that prices are pushed to artificially-high levels. She urges that the Government should take action in order to curb the trend for multiple home owners - leaving more homes available for those who are trying to buy for the first time.
Meanwhile property expert Imagine Homes has opened up property investment to a wider market by creating a concept that it says "alleviates all the concerns associated with buy-to-let".
Customers are offered a hassle-free approach to investing in property through a property acquisition service - investors buy a property "off-plan" with the agreement that they rent it back to Imagine Homes on the day of completion for two years.
Imagine Homes will furnish the apartment, find a tenant and manage the property during this time. In return investors receive what is described as an above-industry average of two years' guaranteed rental income of 15 per cent of the purchase price. Imagine Homes says that this concept has made it possible for a greater number of people to invest.
The Company has noticed there are four main types of investors:
The First Time Investor Representing around 15 per cent of the sample analysed, who are looking to generate profit from an investment before buying a home in which to live.
The City Slickers Representing around 20 per cent of the sample, who are affluent property investors working in the city.
The New Millionaire Representing fewer than 10 per cent of the sample, who already have an impressive property portfolio.
The Empty Nesters Representing over 35 per cent of the sample, who have extra disposable income and want to invest now that their children have left home.