Paragon recently announced that approximately one in every four mortgages being arranged was in the Buy to Let sector. Landlords are flooding to market to fill a gap once taken by First Time Buyers and picking up small ‘starter’ homes in order to let them out. Not only is this shaping our society from a nation of home owners into a nation of tenants but it highlights the massive shortage of new build stock in the UK. Whether this is your ideal Britain or not it is a great opportunity to invest in an asset that is both scarce and in demand.
Why Starter Homes and the Changing Dynamic Offer Such a Great Opportunity
In the past first time buyers would flock to developers for these units and they would often change hands years later at a premium as buyers moved on up the ladder and the housing boom continued. Now you have double the demand – investors are looking to pick these properties up and as wealthier, older first time buyers bring their competition back to the market as the economy improves it’s likely that we will see considerably more competition which can only mean one thing for property owners – upward pressure on prices.
A Nation of Renters: The New Face of Tenant Britain
The early signs of a new attitude amongst single young people in Britain can be seen in two main areas. People now consider it acceptable to wait until 40 to buy their first home – may in their 30’s are planning or simply cannot save faster than that. As someone who rushed to buy in his early 20’s I see this as quite a significan mindset shift.
On top of this we see survey after survey reporting rental voids falling to their lowest levels since before the recession with rental demand increasing almost monthly. A combination of a changing attitude towards renting, a shortage of supply and an economy that seems to finally be over the worst leads to a great set of conditions for Buy to Let landlords. I would expect to see a continuation of these themes certainly in the short term and a somewhat unexpected boon could arise if my predictions turn out to be correct – a step from homeowner Britain to renting Britain where landlords dominate the housing picture – and like all booms the people in at the early stages when bargain property in the better locations was still available often stand to gain the most.