Buy-to-let is strong, says Council of Mortgage Lenders
Tuesday 12 April 2016
Startling statistics show that the number of buy-to-let properties has fallen in the last year, but experts say the figures must be put into context following years of soaring sales.
The data from English Housing Survey suggests the number has fallen by 100,000 during 2014/15, but it does not tell the full story and claims that the rented sector is shrinking have been rubbished the Council of Mortgage Lenders (CML).
They have studied the stats and suggest the data can be 'volatile' between years and should be looked at in three-year averages to get a clear picture of the current state of the market.
If this is the case then the market is indeed in a healthy position, given that the increase in the number of homes in 2013-14 stood at 640,000 - three times as many as initially predicted.
Buy-to-let continues to grow
With this, the CML says the trends from the previous 15 years are also continuing, including the number of people who own their own properties and more importantly for buy-to-let investors, the private rented sector is continuing to grow.
As a result, the CML said: "We see this year’s data as more of a blip, rather than a reversal of these trends.
"A growing private rented sector has long been a characteristic of the English housing market.
"Over the past 15 years, the sector has more than doubled, from two million households to the latest data showing 4.3 million households living in privately rented accommodation. The private rented sector is now the second largest tenure.
"This should not be a surprise, as rental demand has been, and continues to be, very strong."
But behind the numbers and statistics, the CML points to various factors that have helped the market to grow over the years.
Private-rented sector serves changing lifestyle choices
This includes the amount of people living longer, the growing number of people who live on their own, people delaying choosing to settle down or staying in higher education for longer periods.
Of course, there is also a growth in population which includes an ever-increasing number of migrants coming to Britain.
This is also coupled with the drop in social housing and the affordability of properties for first-time buyers.
The CLM said: "The affordability issue has been exacerbated by house prices growing at a rate that has outpaced earnings for much of the last 15 years, coupled with a limited recovery in high loan-to-value mortgage availability post-crisis.
"This means that would-be first-time buyers now need to save for longer for a deposit, with many staying in rented accommodation for a longer period of time.
"The private rented sector is helping to house those aspiring to buy, those who may not want to buy or cannot afford to, and transient cohorts such as students."
But while the Government has outlined its clear intentions to get more people on the property ladder, none more so than with George Osborne's unpopular increase on stamp duty, the CML says the rented sector can still continue to flourish.
They said: "While the Government has signalled a preference for home-ownership, we do not think this should come at the expense of the private rented sector.
"We have already alerted government to the prospect that its proposal of introducing higher stamp duty for second properties could result in higher rents and fewer properties available for rent on the market.
"Not withstanding stamp duty rate rises and upcoming tax and regulatory changes affecting buy-to-let, we still expect the sector will continue to grow, but we expect future growth to be at a slower rate than we have seen recently."
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