The number of buy-to-let landlords could double by the end of the decade, despite clear signs of slowdown in the housing market, the expense of the new buyer packs and the near certainty of further interest rate rises.
Research from market analyst Mintel suggests there are now around two million people in the UK who own a second home.
Of these, half – or about three per cent of all homeowners – are buy-to-let landlords, with the rest owning a second property for their own use. Looking ahead, the survey found that a further three per cent of homeowners are looking to buy a second property to let it out by the end of the decade.
But Philippa Gee, investment director at Torquil Clark, the Wolverhampton-based firm of independent financial advisers, said these were worrying figures, highlighting the fact that more and more people were chasing the same market.
“Buy-to-let represents an interesting opportunity and many people who have been turned off pension and equity investments see this as the answer.
“But the situation is changing: Interest rates are increasing and the regulations are tightening up, particularly with the payment of deposits; the property market is also facing a cooldown.
“Anyone considering a buy-to-let should seriously rethink their approach and consider other investments.
“It is illogical to see how anyone can see this as a golden ticket to success.”
But Paul Davies, senior financial analyst at Mintel, said: “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.”
Savings and loans specialist, Pendeford-based Birmingham Midshires, said the Mintel research confirmed its view that buy-to-let had matured from “a young upstart to a solid and established part of ther UK mortgage market”.
4 Comments
USA - crashing!
Ireland - crashing!
Spain - crashing!
UK - ??????
Like any other investment trend there is a point where BTL is no longer profitable - this point has already been reached. The BTL exit will be a stampede unlike anything seen before.
Buy to Let (BTL) will continue to grow as long as there is demand for properties to rent. All figures point to the fact that (nationally) there will continue to be a shortage of homes hence demand should exceed supply. Increased interest rates will increase demand for rental as it will be more difficult for people to get on the property ladder. Hence increased interst rates should not cause the serious investor to join the stampede for the exit.
Sensible landlords should look at BTL as a long term investment and while rental income may not initialy cover BTL motgage payments, the situation should ease over time as rents increase. Long term, capital growth is about as certain as you can get with any investment - hence the expression “safe as houses”. BTL will continue to be an alternative way for responsible people to be independant in retirement.
The only real certainty is that this opportunist and devious government will see BTL landlords as an easy target in years to come and will launch a raid on the portfolios. This will give the government another source of income to squander as they have done on our other pension provisions.
Property is like any other investment. You need to research it!
Look longer term for property investments.
So buy to let is cylical.. what isn’t? buying now for rewards in 15-20 years time.. history shows it is a safe bet.. Let me put it another way… if you could go back in time 20 years and buy just 1 other house to keep as an investment … would you?
PLAN & RESEARCH and be DECISIVE.. people who wait, wake up with little to now financial saftey net and then complain about what happened…
Bank deposit interest rates are not going to make you wealthy.
Lee you are sooooo wrong. Like Dave said BTL will continue to grow. The other problem is lack of social housing. So whilst the government will not build any more council housing, and Housing association properties are slow on the increase. We will need to utilise private rented properties. Those who cannot obtain social housing because of long waiting lists will rent privately and either pay rent or get housing benefit (any excess can be paid through discretionary housing benefit payments).
The Government have already compiled consultation documents regarding social housing and the need to utilise private rents. Also you have the rent deposit scheme soon up and running in Wolves and nationally