While the private house market is slow the same can’t be said for Buy to Lets. Estate agents are finding that, while homeowners with anything less than perfect credit scored find it hard to get loans and mortgages investors and housing associations are buying up cheap properties in order to rent them out.
First time buyers who are struggling to get a foot on the housing ladder are being superseded by investors who have the available funds to purchase property without a chain when it becomes available and then letting it out to the rental market.
As housing charity Shelter recently unearthed, almost a ten percent of Britons have taken short term, high interest payday loans, bank loans and overdrafts to pay for their rent or mortgage. When people are so short of funds it’s not surprising that the volumes of people trying to buy is at an all time low. The sluggishness of the market is only helped by banks’ refusal to lend money to private buyers meaning that there is only share among cash rich landlords and associations. Some estate managementanalysts believe that this is one of the most telling factors affecting the housing market today.
The numbers, not only of rental properties, but of private landlords who’ve been able to invest in property is growing because banks are more favourable to lending to buy-to-let than they are to private buyers, in the last quarter of 2011 they lent £3.8 billion in buy-to-let loans and mortgages.
But it’s not just the British who are enjoying the returns from the buy to let sector’s growth, many foreign investors, particularly those in economies which have been largely unaffected by the economic downturn, have been buying up investment properties which include both private and commercial property to let. These ‘accidental landlords’ are purchasing investment portfolios without much concern for what they actually contain, they are simply buying with a view to making money, once they see a return on their investment, either through rents paid or the recovery of the house price, they will sell again. Meaning that, again, the property will only be sold once it is too expensive for a first time buyer to afford.
Another factor for accidental landlords who never wanted to be landlords in the first place is the fact that their portfolio may have been bought before the crash and now they are left with property that they are simply unable to sell. With all the loses that have been taken by most western investors over the past three years taking another hit by disposing of property at a loss simply isn’t an option.