Despite the gloom over the UK’s buy to let sector, landlords are being
encouraged that the market will surge over the next seven years.
Research from estate agency Hamptons International says that despite
anti-landlord legislation increasing recently, the BTL sector will grow
considerably and by 2025, there will be 6 million households renting their
home in the UK.
In a statement, Hamptons says that in the year to April 2017, the numbers
of households renting grew by 3%, or 164,000 tenancies.
They say: “We forecast that the BTL sector will continue to grow this year
and over the next five years.”
The figures highlight that 20.5% of households will, by 2022, be renting in
the UK which is a rise from today’s figures of 19.4%.
22% of all homes will be rented
However, just three years later, around 22% of all homes will be rented
which equates to six million households.
The agency also highlights that cash purchases of buy to let properties are
becoming increasingly important to insulate the investor from tax and
regulatory changes.
From their analysis, Hamptons say that in 2017, around 65% of all BTL
purchases were made with cash. That equates to £21 billion worth of
investment property.
They also point out that buying wisely will bring benefits for investors
and they highlight that strong house price growth, particularly in the
south of England, has shrunk yields.
They also highlight that the average landlord who sold up in 2017 made a
total gross return of 69% over the average time they held a property, which
was more than 8.5 years.
Their report also highlights that the buy to rent market in the UK is
growing quickly with interest from tenants and investors growing. These
homes can attract a rental premium of 25% above an existing flat or 11%
above that for a new build flat.
Mortgage brokers reveal boom in BTL business
Meanwhile, mortgage brokers will soon see a third of their buy to let
business coming from limited companies.
The prediction is being made by David Whitaker, the chief executive of
Mortgages for Business, and he says there are considerable opportunities
despite the shrinking rental market for mortgage brokers in the BTL sector.
His firm has carried out research that reveals that the UK’s buy to let
market is split evenly currently between a sole name business and a limited
company.
However, seven in every 10 new property purchases are being completed
through a limited company structure which is proving its popularity.
