Investing in UK Property - The Buy to Let Story

The Historical Story of Buy To Let

Back at the beginning of the 20th Century more than 70% of the UK population lived in rented property - an enormous buy to let marketplace. The massive growth in owner occupiers didn't begin until after the Second World War. Attitudes had changed and renting was seen as the 'poor man's' option with a real stigma attached to it.

The percentage of people renting fell solidly until it reached just 5% of the market in 1992 - a stunning fall and a complete social reversal of the attitude to housing just a century before.

Over the last 20 years this intense focus on owning property has shifted and today the percentage of renters has grown to about 14% (Government Statistics).

Of course, for every renter there has to be a private landlord owning the buy to let property, so the almost three-fold increase in rented property has been matched by a three-fold increase in buy to let property owners.

The Future For Buy To Let in the UK

It's extremely bright for a great mixture of reasons. Here's just a few of them:

• Higher prices and greater deposits mean that more young people have to rent for longer before they can buy.
• Tougher credit scoring for buyers means many are turned down for mortgages
• Greater job insecurity mean that many people don't want the risk of buying
• The culture is changing - renting is now socially acceptable
• More uncertainty over future house price rises puts some people off (bad reason in our view!)
• Despite the credit crunch, mortgages for buy to let landlords are available at reasonable terms
• The recent fall in prices is a double whammy for buy to let investors - lower prices and higher rental yields!

Bottom line, many more people can't buy or don't want to buy property now, or maybe ever.

The Experts View

Knight Frank recently forecast that the private rental sector would grow to 25-50% of all housing in the next few years.

And Yolande Barnes, head of research at Savills, expects the rental market to hit 20% 'soon' because of the many great deals currently available to buy to let investors!

In our view, buy to let investors can expect the current rented sector to grow by 50% to 100% in the next 10-20 years, which will underpin rental demand and price growth.

Is Buy To Let The Only Investment Choice For Property?

No it isn't. Generally we divide property investment into short term and long term strategies.

• Short term - 90 days to 2 years
• Medium to Long Term - 3 years to 15 years

Typical strategies for short term investment would include buy-refurbish-sell. Axis strategy for Quick Cash Profits falls exactly into this strategy.

Long term investment strategies are buy-rent and buy-refurbish-rent. Clearly if you are going to hold a property even for a couple of years you will want income to cover the financing cost, or to reward you for your cash investment.

Properties that are rented, owned by buy to let landlords, are the most numerous of all investment property. Owning a capital asset that isn't going to produce a rental negates a core benefit of owning property!

We know that buy to let is a great concept; you hold the potential for both rental growth and capital gain, plus an income whilst you wait for your investment to mature. But beware because there are many very bad buy to let propositions! Choose wisely and you will be well rewarded. Use the Axis website to learn more and invest in Rod Thomas's property investment course - PIPS: The Property Investment Profit System.

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