Tenants are now more likely to stay as tenants and invest in property too
Two recent surveys have confirmed what we’ve been hearing from our landlord and tenant clients: landlords are confident in the future, and tenants are seeking new ways to get on the property ladder. Here’s a breakdown of the news, and what it means for the private rented sector (PRS) and you as a landlord.
Knight Knox finds that buy-to-let landlords remain confident in the PRS
Despite the government’s best efforts to derail buy-to-let investment (higher stamp duty, reduction of tax relief on mortgage interest, etc.), Knight Knox has found that landlords remain confident in the PRS. It asked 500 buy-to-let landlords of their views, and 59% are still confident in the prospects and profit potential of buy-to-let property in the UK. Only 11% had lost confidence.
This level of confidence was further cemented, as half said they intend on adding properties to their portfolio in the next five years.
The PRS is only going to grow
Traditionally, people have rented homes while saving a deposit to buy a home. It seems like this is changing. It’s getting more difficult for generation rent to get on the housing ladder. House prices keep rising, and this stops many from buying where they currently live. Consequently, homeownership levels look set to continue their slide, while the PRS sector continues to grow. But there is an interesting development in the market: tenants are more likely to buy outside of the area where they live to benefit from property investment.
Here are the conclusions of a LetBritain survey of 2,000 people: it found that 39% of people across the UK don’t have sufficient finances to buy the type of property they want, in the location they want. In London, this figure is 49%.
Consequently, more of these tenants are taking the alternative route of investing in buy-to-let property in a different location to where they live and work. More than a quarter said they plan to adopt this strategy. In London, 42% of tenants said they plan to become buy-to-let landlords in this way. It gives them a foot on the property ladder and a second passive income stream.
Bricks and mortar – the asset that keeps giving
You know, bricks and mortar have been an incredible asset for investors in the UK over several decades. It has provided stellar capital gains and steady, inflation-beating income for many buy-to-let landlords. It has allowed the savviest and most aggressive investors to build substantial wealth from a standing start.
The property fundamentals in the UK aren’t going to change anytime soon. We are not building enough new homes to satisfy demand. Fewer would-be home buyers can afford to buy. The PRS is growing incredibly fast. At the most recent count, there are around 6 million homes in the PRS. By 2025, this is forecast to grow to around 7.2 million – or a quarter of all households in the UK.
Although it is becoming increasingly difficult for first-time buyers to get on the property ladder, they are beginning to take a more flexible view. Instead of waiting for years before they have saved the deposit for a home near where they work, they are buying property to rent out elsewhere.
- This gives them the benefit of potential capital gain that grows their wealth faster than cash in the bank.
- It provides them with a new income stream, which should increase as rents rise.
- It also offers them a potential place to live should they decide to move away from the big city where they currently live.
One feature that is common among most successful buy-to-let landlords is that they concentrate on what they are good at (investing). While letting other professionals help them – solicitors, mortgage brokers and accountants. And investment property managers like Ezytrac.
We’re there for our buy-to-let landlord clients, taking on the day-to-day tasks of property management. And helping them manage and monitor their property portfolio. Also leading a busy life with work commitments in another town. It’s a level of service we’re proud of, and that very few (if any) other property management companies offer.
Contact one of the Ezytrac team today on +44 01522 503 717, and we’ll help you devise a strategy to benefit from generation rent.
Yours in effortless property management,