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Buy to let boom fuelled by changing lifestyles

15th December 2006 | back to article listings BACK    print this article PRINT

As has been widely documented, the liberalisation of landlord laws in the mid-nineties has led to a remarkable boom in the UK buy-to-let market, but new research suggests that the increase in the number of renters may also be due to changing sociological trends.

The plight of first-time buyers' struggles has been much discussed recently as house price inflation continues to rise relentlessly the average UK property was valued at £187,995 by Halifax in November causing a surge in demand for rentals.

However, research by Birmingham Midshires suggests that this demand is not made up purely of those who choose renting by default.

Almost one in six of today's tenants questioned in the survey stated that they never want to own their own house and a further 12 per cent said that they chose to rent because of the greater flexibility that a life unburdened by a heavy mortgage offers.

Furthermore, 12 per cent of Brits obstinately claimed that they would prefer to rent in their ideal area, rather than own their own home elsewhere.

This shows that, far from being a lifestyle choice defined by one's finances, more people are actively choosing to rent their accommodation as the once strong British tradition of being the 'master of one's castle' appears to be on the wane.

Tim Hague, managing director of Mortgages at Birmingham Midshires said: "Recent house price growth has been well documented, so it's hardly surprising that many people believe they will struggle to buy.

"However, the findings reveal an interesting trend; people are actually making a conscious decision to rent rather than buy."

He continued: "The buy-to-let market has experienced consistent growth over the last ten years, and these findings help to demonstrate why. More and more people now see letting property as an achievable investment and an important part of a balanced investment portfolio."

Mr Hague's comments come as anecdotal evidence suggests that the rise of buy-to-let investors may be due to disillusionment in the pensions industry.

"We know that buy-to-let has been a very strong market recently through the upturn in mortgage demands," said Ed Stansfield, UK property analyst for Capital Economics.

"The evidence suggests [the cause of this] is individual investors. Why they are doing that is a matter of pure speculation."

The mood at the moment is that more and more people are becoming disillusioned with the pensions industry and that is certainly an element of it."

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