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Latest housing market reports are good news for buy-to-let investors

5th July 2007 | back to article listings BACK    print this article PRINT

Students and young professionals are a key part of the market for the landlord operating in the private residential sector. For most of these, renting allows them to pursue their educational or professional aspirations by providing them with the ability to live where they need to be without having to outlay massive amounts of capital.

This is something that has been recognised by a number of finance and housing industry bodies. This week, Scottish Widows released a report in which it noted that the rentals sector was essential for students and graduates alike, as most have no choice but to rent their home for a certain time before they are in a position to make a property purchase of their own.

On Thursday, a report released by Barclays found that first-time buyers - and young professionals especially - are paying more of their net household income towards their mortgages than ever before, averaging around 30 per cent. The problem is particularly pronounced in London, where recent graduates were found to be paying as much as 50 per cent of their income towards their mortgage.

The findings echo a recent warning from the National Housing Federation (NHF), which concluded that a "massive crash" in the housing market is the only way that UK workers on an average salary or other moderate income will be able to afford a property of their own. Even if this did occur, the NHF speculates that many workers would still be unable to raise the necessary funds to buy a home of their own.

A spokesman said: "I think that house prices have risen to such a point that even if the market slows down, or even if it goes into decline, there'll still be a very sizeable proportion of people who can't get onto the housing ladder without some sort of assistance - house prices are so far above people's average salaries at the moment."

According to Scottish Widows, this is good news for the buy-to-let investor. A spokesman said: "A lot of young people nowadays want to rent anyway because if they want to live in London, in the city, or in Edinburgh in the city for work purposes, they can't afford to buy anyway so they don’t really have the option not to rent."

He added: "For many, I think it is a lifestyle choice as well, a lot of people are putting off buying until they see what the house market does, to see if it becomes more accessible for them". In the meantime then, the way is clear for the private residential landlord to clean up, as long as they have properties at the right price in the right place.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3604.html. Alternatively, please see our full press release archive.

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