Britains Rental Market

World News

The Buy to Let market is very important to Britain. Elevated property prices
mean the young stay as tenants for longer; whilst, people of retirement age are
ever increasingly moving back to rented accommodation. They are releasing the
equity in their home, having enjoyed massive profits from quickly rising
property prices.

Britain’s rental sector

In 1939 the rental market was split almost 50/50 with owned accommodation at
55%. During the 80’s this dropped to only 7%. In 2000 there was a different
picture with rental at a massive 90%. This was caused by the astronomical house
prices.

The BTL market was revived by the Conservatives in 1988 with the
introduction of the Assured Shorthold Tenancy. The Association of Residential
Lettings Agents (ARLA) then created the buy to let mortgage which stimulated
the industry.

Governments now recognise the importance of the Private Rental Sector (PRS)
to the UK economy in helping to create a flexible mobile workforce and also in
supporting social housing. 

Recently landlords have come up against some difficulties in the BTL market
as house prices have doubled from 1997 to 2008 but rents have only risen 15%.
Increasing government legislation is also affecting the market with some
landlords being put off by all the red tape. Regardless of this, property
investing is a safe investment opportunity provided the correct research is
carried out.

How the economy affects investors

Many investors have made mistakes by believing Brown when he said it was the
end of the Bust years. Some property investors have been crazy enough to
believe a Bust would not come again. They have been proven wrong as we now
experience the biggest bust since the 1930’s. 

Many investors will have over stretched their portfolio and with sales
taking longer to go through some are left with mortgages that are not being
covered by low rents; although the low interest rates will be helping in some
way. 

Although there are signs of a market recovery, there is still a lot of
trouble ahead. Unemployment continues to rise, lending continues to be
restricted and economic growth remains low. Efforts by the Bank of England to
reduce interest rates and use “quantitative easing” – the printing of
money, appears to be turning things around. This will however catch up on usBusiness Management Articles,
as in the long term the government will cut spending and raise taxes.