The rental market in the UK has been strong for investors for some time now, with the sector providing them with a perennially high level of demand and steady yields that can be relied upon. However, according to the latest statistics, things could be about to get even better for those putting their money into the buy-to-let market, with the volume of people who are now opting to buy their own home falling. This, of course, means a greater number of new households in particular renting instead, which helps improve conditions for landlords.
According to statistics from the Council of Mortgage Lenders, the gross lending level for January this year was £14.3 billion. This figure was 14 per cent lower than in December of 2014, as well as being markedly down when compared to a year ago.
A drop of 11 per cent in the space of just 12 months in the number of people taking a mortgage shows how the market is changing, with far fewer buyers around than there were just a year ago. The fact that this comes at a time when Stamp Duty changes have made the market more inviting to buyers makes it even more surprising, and perhaps shows just how many people are now settled into the rental market.
This idea can also be seen on a longer-term basis by looking at the way the number of people who own their own property has declined in the space of the last 11 years. Home ownership hit an all-time peak in 2003 when it reached more than 70 per cent. However, it has been on a steady decline ever since as fewer and fewer people opt to own.
In the year to the end of 2014, the report released last week by the Department of Communities and Local Government shows, the number of people who own the property they live in fell to just below 63 per cent, a 30 year low. This was down from the 65 per cent in evidence just a year before.
The largest decline can be seen in the market for younger buyers, with the data showing that people aged between 25 and 34, traditionally the vast majority of the first-time buyers’ market, are now less inclined to purchase a home. The volume of people in this group who now own their property sits at 36 per cent, down from 59 per cent in 2004.
An even more telling figure about the strength in the rental market for investors was also released. The official figures showed that in 2014, the number of people aged 25 to 34 who were renting rose to 64 per cent from 41 per cent a decade earlier. In the same period, the volume of 16 to 24-year olds who were renting climbed from 76 per cent to 91 per cent, showing just how many people are in the rental market, and how this could really benefit the buy to let investment market..