The UK’s BOOMING Rental Market in 2011 – Who Would Have Thought!?

The UK’s BOOMING Rental Market in 2011 – Who Would Have Thought!?

0 1709

No one was hit harder by the violent crash of the UK housing market than buy to let investors. Landlords went from having no difficulty getting credit to having no chance of getting credit in a very short space of time. The market was just too risky. But now they are having the last laugh, lenders are practically falling over themselves to keep buy to let investors in credit as the UK rental market booms.

There have been near constant reports of rising rental demand and rising rents since the second half of 2010. According to the reports rents rose across the entire UK in 2010, but the most notable rises were, and continue to be in London and the South West. According to Cluttons, rents in Central London rose by a record 19.1% in 2010.

And it hasn’t stopped this year. In RICS second quarter report in the buy to let market, a balance of 35% of surveyors reported rents rising rather than falling, and the also reported rents rising as well with a forecast for 8-10 percent rises in Central London this year.

The growth is hardly surprising. The UK house price correction was nowhere near as expected, or as it would have needed to be to make UK housing affordable — especially in London. And at the same time the crash in the banking system was exactly as bad as expected, or maybe even worse. The banks are barely lending, and even the few first time buyers with good enough credit to get a loan need at least a 10% deposit, which most just can’t raise in the current climate. So, would-be first time buyers are renting and getting used to it.

This is now fuelling record growth in rents according to the latest data from LSL Property Services. In the latest release of its buy to let index the firm reported a 1.2% month on month increase in August. This is the fastest rise recorded by the index in a year, and took the average rent in England and Wales to the record high of £713 per month.

So, the investors who can afford it are building their portfolios at record low interest rates, and with prices still subdued in most of the country (except London and the south). House-builder Barratt have just reported a 25% rise in sales to investors in the first six months of this year compared to last year. This growth is confirmed by the growing number of buy to let mortgage products being released by lenders to meet the growing demand.