( 22/03/07)
According to latest research findings based on BDRC's Landlords Panel* 34 per cent of new investors who own just one buy-to-let property are aged between 25 and 34. Younger investors may not be able to buy their own home but some are investing in buy-to-let properties as a way of getting their foot on the property ladder. Lynsey Sweales, Marketing and PR Director at The Money Centre, describes why buy-to-let is an industry no longer dominated by the more mature investor.
“Traditionally the buy-to-let sector witnessed the stereotypical older business man looking to secure his retirement by investing in property. Recently, a new generation of young professionals are choosing to make a considered and long-term investment in buy-to-let property enabling them to prepare and take control of their future.
Young landlords are looking at an investment that will see them safe not just for the foreseeable future, but possibly as far as retirement. Buy-to-let is considered a secure investment plan because at a future point investors can either sell their properties, netting a lump sum of money, or retain the properties and the benefit of receiving a regular income stream that can supplement other forms of pension provision.
According to recent research by The Money Centre, one in five landlords earn a sufficiently large rental income profit to be able to save at least some of the proceeds, highlighting the dynamic nature of buy-to-let. Most landlords, however, are pursuing a dual investment strategy of growth for both rental income and capital value.
The research also revealed that 33 per cent of investors own just one buy-to-let property. In many cases young couples with one buy-to-let property have become landlords when both have owned an apartment, but have decided to live together in one and let out the other. This is how buy-to-let took off in the early 1990s when house prices suffered a sharp fall and many young couples decided to rent out their property rather than selling at a loss.
There has been increased confidence among new buy-to-let investors so far this year, heightened by record levels of total mortgage lending when it reached £24.6 billion during the month of February. This is the highest lending figure on record to date and is an increase of nine per cent compared with February 2006, which reflects the continuing strength of the market and the strong desire of many people wanting to get a foot on the property ladder or move house.
The buy-to-let mortgage market is being driven by demand from immigrants, students and young professionals and total gross mortgage lending is expected to reach £360 billion in 2007. This will instil confidence in investors looking to expand their portfolios this year, despite three Bank of England interest rate rises since August to 5.25 per cent.”
* BDRC's Landlords Panel: 518 interviews with a representative sample of privately letting landlords conducted between 7 and 16 February 2007.
