Britains Rental Market
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 us, as in the long term the government will cut spending and raise taxes.
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