The UK population is increasing rapidly, but how will this affect buy to let?
According to the Office of National Statistics the UK population is forecast to increase by over 15 million within the next 45 years. It is one of the few European countries where the population is anticipated to increase so dramatically.
The government has set targets to build 200,000 new homes each year. The construction industry was only fulfilling about 60% of that and most big house builders have now ceased building altogether whilst the current market settles down. Even if the targets of 200,000 new homes is met this would equate to only about 8,000,000 new homes by 2048 - a short fall of seven million.
So what affect will this have on the buy to let market and for you as a property investor?
In Europe, countries such as France and Germany have a much higher portion of rental properties and judging by recent legislation such as the controversial Home Improvement Packs, the electrical and gas certificates now required from landlords, and the move to have landlords register with the local authorities, it appears the government is keen to raise standards and make the buy to let market more professional. This would seem to indicate that they see more reliance on the private rental sector in the coming years.
If that is correct then, despite the burden of the extra red tape, it is a positive development for those landlords who want to run their buy to let business along professional ethical lines. Given a shortage of property to rent, demand for quality property will inevitably push rental values higher.
Our advice, if you wish to benefit from the changes in the buy to let industry would to be to increase your portfolio with high quality properties, invest sufficient funds so you have positive cash flow despite variances in interest rates and treat your tenants well so that you retain them for longer periods – think along the same lines as a successful business would treat their clients. If you do this you will reap the rewards over the next few decades as we see the private rental sector increase.
Article reproduced by permission of www.armchairpropertyinvestor.
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