Recent figures released by the Office for National Statistics and Land Registry show that private landlords are set to own £1tn of property in 2015.
Landmark to be reached late spring
At present, buy-to-let landlords own just over £930bn of property, meaning that the sector’s now over three times the size it was in 2001. If growth continues at the current rate, it appears as though landlords will own £1tn of property by late spring 2015.
What’s causing the rise?
With house prices continuing to grow alongside investor appetite, the buy-to-let sector continues to grow, and some analysts even labelling it as a ‘boom’, with the market expanding relatively quickly in the past half a decade.
Figures show that since 2001, just short of 2 million households have been added to the sector at a rate of around 150,000 properties a year. By 2016, some predict that this number could rise even further, to 5 million in only 15 years. If this figure is realised it will mean that one in every five houses will be part of the sector.
Ever since the UK began recovering from the recession back in 2009, many landlords have benefited, with the recovery pushing their wealth up; especially if they’d purchased property in London or the south-east.
Alongside this, there appears to have been a great deal of impetus from growth in the number of households, with demand from tenants also continuing to climb, as many choose to rent than buy.
Why are people renting rather than buying?
But why is this the case, and why would people rather rent than buy? Well, for many, it appears to be a lifestyle choice, allowing a tenant a greater degree of flexibility than if they were to buy a property outright.
In addition to this, of course, is a financial squeeze; particularly at the younger end of the market, with many opting to rent as they’re currently unable to secure a mortgage or begin saving for a deposit. In this regard, it’s almost as though Britain is aligning itself with its continental neighbours, with renting becoming the norm rather than the exception.
Is the trend likely to continue?
When looking to the future, it appears unlikely that we’ll see much of a change in the coming few years.
New pensions regulations, which are set to come into force in April 2015, could bring further money into the sector. This could provide it with an additional boost, as it appears likely that those looking to invest will buy property in the hope of providing themselves with an income in their retirement, rather than sticking to a traditional savings account.
So, to conclude, with figures already showing that landlords own £930bn of property in the UK, it doesn’t appear as though it’ll be long before that figure reaches the £1tn mark, with some predicting that it’ll be late this spring. With profits continuing to be fuelled by strong demand, it looks like there are no signs of the market slowing down at any point soon.