10th April 2007
Metro – Buy-to-lets set to surge
Young people's desire to stay 'footloose and fancy-free' will be the reason for a surge in the buy-to-let market in the next decade.
Buy-to-let business is predicted to grow by more than 40 per cent by the end of 2016, according to a report by Alliance & Leicester Mortgages and the Centre For Future Studies. This is because younger generations will prefer to rent as it becomes more socially acceptable not to own a home, and students and single people want to stay more flexible and mobile. Stephen Leonard, mortgage director of Alliance & Leicester says: 'Demand for rented property has grown steadily in recent years and returns on buy-to-lets have increased. This growth is expected to continue'.
A fifth of buy-to-let landlords are now 'professional' and earn the equivalent of the national average wage from their rentals. Professional landlords are defined as those with a property portfolio worth £1million or who have been landlords for two or more years with six to 20 properties.
The buy-to-let market grew rapidly in the past five years. There are currently 767,000 loans outstanding, accounting for more than eight per cent of the total value of all mortgages, according to the Council of Mortgage Lenders. Forty per cent of buy-to-let landlords own property in the South-East of England.
Leonard says: 'The prediction of further rate rises this year has fuelled debate about a cooling in the buy-to-let market with rental yields decreasing but, with more professional landlords and the majority expecting to stay in the market for more than ten years, buy-to-let will remain an important part of the overall housing market'.