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Positive attitudes towards renting and a desire to be footloose and fancy free have sparked a surge in the buy-to-let market, which is predicted to grow by 41% by 2016, according to a new report by Alliance & Leicester Mortgages.
A&L's 'Changing UK Household Market' report, undertaken in conjunction with the think tank Centre of Future Studies, shows that the buy-to-let market, fuelled by the growth in private rentals, will play a pivotal role in the future of the UK housing market.
The three key drivers for buy-to-let growth will be: A rise in the traditional rental market, especially among students and single people, younger generations preferring to rent as it becomes more socially accepted not to own a home and increased use of rented property by people seeking flexibility and mobility.
Current trends will also continue to contribute to the success of the buy-to-let market with the rise of professional landlords - those with rental income equivalent to the national average wage. This group now accounts 21% of all landlords.
Professional landlords are defined as those who have a portfolio worth at least £1 million or who have been landlords for at least two years with six to 20 properties to their names. They also tend to be younger than non-professional landlords.
Both professional and non-professional landlords in the UK currently own an average of 4 buy-to-let properties worth nearly half a million pounds. Around half of landlords own 5 or fewer properties, and around 2% of landlords own more than 50 properties.
London and the South East form the buy-to-let hub in the UK, with over 40% of landlords owning property in these areas. Overall, nearly two-thirds own property in the South of England.
Meanwhile, 11% of all landlords say their main job and main source of income comes from letting property. A further 20% say that being a landlord is a part-time job which provides them with a substantial part of their income. The majority, just over two-thirds, have another full-time job and mainly rely on other sources of income.
Stephen Leonard, Director of Mortgages at A&L said: "The prediction of further rate rises this year has fuelled debate on a cooling in the buy-to-let market with rental yields decreasing. However, with increasing numbers of professional landlords, and the majority expecting to stay in the market for more than ten years, buy-to-let is likely to remain an important part of the overall housing market."
07 March 2007 © Moneyextra.com
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