At the time of the last census in 2011,
3,401,675 properties in England were privately rented, of which it is
estimated, over 1.25 million were owned by private landlords. The
rapid growth of buy-to-let is hugely controversial, especially as
only ten years before that, there were only 1,798,864 properties
under private renting in England. Buy to let landlords have been held
responsible for forcing up property prices and preventing the younger
generations from being able to buy. There is also growing resentment
toward the billions of pounds in tax relief (estimated to be nearly
£10 billion) landlords claim on their mortgage interest -tax relief
which is not available to homeowners.
They may be asset rich thanks to
recently rising property values, but let us not make the landlords
the bogiemen .Despite all these benefits enjoyed
by private landlords, let us not forget the good they have done,
especially in Cheltenham.
Property values today in Cheltenham are
now back to around the 2007 property boom levels (2007 being the peak of
last property boom before everything dropped in 2008/9), yet
inflation has risen by 26% in the same time frame, so in real terms,
properties today are 26% CHEAPER than they were in 2007. Just think
how low they would be without landlords buying all those rental
properties in the town. Interest rates are at an all time low and
first time buyers only need to save a £8,000 deposit to secure a 2
bed semi in Wymans Brook with a 95% mortgage. Forget what the papers
say, first time buyers can borrow money relatively easily on a 95%
mortgage and nine times out of ten, it’s cheaper to buy than rent.
So why aren’t people buying?
The number of people choosing to rent,
either for lifestyle or economic reasons, has grown over the last 15
years. I also believe they will continue to grow for some time to
come (as does every report on the subject). In fact I would go as far
to predict the number of rental properties in Cheltenham will have
risen from the 10,260 properties recorded in 2011 to 15,000 by 2021.
Sounds fanciful? Well in 2001, there were only 5,811 privately rented
properties in Cheltenham.
It is a fact that we as a country are more and more turning into a European model when it comes to
homeownership, where the norm is renting for the first ten years, as
opposed to the norm from the 1960’s to 1990’s, where first time
buyers were encouraged to buy as soon as they got a job.
Tenants, in particular, will also feel
the benefit from potential changes in the market. The likelihood of
interest rate increases in late 2015, existing economic conditions,
combined with the uncertainty of new Government manifestos following
the General Election in May will result in low demand for people to
buy yet also put a dampening effect on increases in rent. As long as
landlords buy the right sort of property, that allows for a
reasonable yield, decent capital growth, everyone will be a winner.
If you want a chat about what would make the best sort a property that
would offer that in Cheltenham, then please email me on
neil.west@belvoir.co.uk.
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