Why buy to let is here to stay
Buy to let has come under a lot of pressure in recent years, with changes to tax allowances, the stamp duty premium, interest rate rises and more regulation of the sector.
However, at the end of the day buy to let investment continues to be underpinned by strong fundamentals. So there are lots of good reasons to suggest that renting will be more popular than buying for a long time yet – and that there’ll always be a good demand for rented property – and for buy to let investors to provide it.
Consider some of the buy to let facts:
* Renting is now the only option for millions of people who simply can’t afford a deposit – let alone a mortgage.
With household budgets set to be tight for the foreseeable future and much economic uncertainty it’s difficult to see things changing anytime soon.
* Prices in some areas are now so high that renting is the only realistic way to find accommodation.
For decades, big cities like Paris, Tokyo and New York have been largely rental-only locations. Many areas of London are now unaffordable to the majority of owner-occupiers with the likelihood that many more, plus other popular parts of the UK, will also become completely off limits to those wishing to buy.
* It can actually be cheaper than buying. Some reports suggest buying is slightly cheaper, others suggest renting is slightly cheaper. Whatever the truth, there’s not much of a financial advantage in buying a home right now.
* The days of free-and-easy, write-your-own-cheque mortgages have gone for good. Stress testing means that lenders are being much more choosy about whom they lend to and how much they’ll lend.
* Renting a home can be much less hassle than buying. Often overlooked, this can be a significant attraction for many tenants. Those like busy working people, families and singles. There’s no dealing with breakdowns and no regular maintenance like painting and decorating to bother about.
* Renting offers flexibility that buying can never match. Those who need to move for work, to study or for personal reasons, who want to upsize or downsize, can move quickly and easily when they rent a home.
As a tenant, you never get stuck in a protracted chain waiting for your house to sell, your buyer’s house to sell and so on. You can move into a new home with just a few week’s or even day’s notice. Almost total freedom!
Even if everybody who wants to buy a house then this market alone would still be an absolutely huge market to serve for buy to let landlords.
In my opinion it’s no exaggeration to say that renting is much more than just a passing trend. Renting is and will continue to be a good choice for tenants for years to come – and continue to be a wise investment for well informed, well organised buy to let investors.
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