The latest major piece of research into the private rental sector is forecasting a huge surge in demand - meaning there will be six million households renting by 2025, a significant increase on the current figure.
Hamptons International says that despite the recent additional homes stamp duty surcharge and the phasing out of mortgage interest tax relief on investment properties, the buy to let sector is destined to grow considerably by 2025.
Between April 2016 and 2017 the number of households renting increased by 164,000, some three per cent more than 2016, says Hamptons.
By 2022, 20.5 per cent of households in Britain will be privately renting, up from 19.4 per cent today. By 2025 the sector will reach six million households - around 22 per cent of the total.
In an extensive piece of research, the agency also notes that cash purchases are becoming increasingly important in the sector, insulating it from regulatory and tax changes. Some 65 per cent of investor purchases were made with cash in 2017 adding up to £21 billion worth of property.
The agency admits that strong house price growth has shrunk yields for new buyers, especially in the south of England, but insists that “buying wisely” brings benefits.
So for example, average yields in London are 5.4 per cent compared with 7.9 per cent in the North West, yet 20 per cent of London landlords achieve higher yields than their North West counterparts because of a more strategic choice of the property type and location in relation to demand in a particular suburb or neighbourhood.
Hamptons also says that on average, landlords selling in 2017 made a total gross return of 69 per cent over 8.5 years; some 60 per cent of that return was from rental income and 40 per cent from capital appreciation.
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Yes.......but.......err...... Let's think outside the box.
Slowly the legislation that allowed lettings to re-start in the UK which was put in place by Margaret Thatcher's government is being rescinded. We will soon be back to status left by Harold Wilson's comrades were letting domestic accommodation was a practical and financial impossibility.
To have a lettings market landlords have to have close control of their properties and an absolute right to remove tenants who are not profitable. Back before electronic everything that was the only way it worked.
Now we can easily make sure that landlords do their job properly and that is what is being done. Unfortunately it is costing a lot and the tenants are going to have to pay for it. That is what they want and they are going to get it so that is great news!...? This can work but we are expecting further new legislation to give tenants almost an absolute right to stay in properties even if the landlord wants or has to move them on. Thus we go full circle, "To have a lettings market landlords have to have close control of their properties and an absolute right to remove tenants who are not profitable."
Big companies may be able to maintain a viable domestic lettings market by being able to fund a very efficient use of the legal system but bad or just plain luckless tenants who fall foul of these systems are going to find themselves frozen out of renting property for the rest of their lives. The cost to landlords of helping these people will become a business expense which can be controlled but at an unacceptable cost which will have to be stopped.
I let several properties. If tenants occasionally need a few days to get their rent up to date after Christmas I can live with that. If they want to live in their own filth I can do that as well but they will loose their deposit for cleaning when they leave. What I can not put up with is damage and antisocial behaviour. These activities require eviction asap for both myself and neighbours.
If I can not manage property without the huge expense of using the law then it is time to sell up. My first property is on sale now. It is better to have the flat empty and safe from damage and legal cost in the meantime.
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