Buy to Let 10 Years Old - Now a Major Industry
ARLA Buy To Let Report 2006 904k
At the tenth anniversary of its launch by ARLA,
the Association of Residential Letting Agents, Buy to Let has proved
to be a force for good in the housing market and a major industry in
its own right. This assessment was presented at No. One Birdcage
Walk, Westminster, today (Sept 26), in a specially commissioned
report, “Buy to Let, The Revolution – 10 Years On.”
Today over a million households live in Buy to Let
properties. These property assets are worth well over £120 billion
and the Buy to Let sector contributes over £30 billion to the
economy each year. This contribution is worth more than that made by
all the pubs, hotels and restaurants in the country and is over four
times more than the contribution from the motor industry.
Presenting his report for ARLA to an audience from
Government, The City and the property industry, Michael Ball,
Professor of Urban and Property Economics at the University of
Reading Business School, forecast an average growth in numbers of
Buy to Let tenancies of 20-30,000 a year over the next ten years. He
pointed out that while demand for Buy to Let mortgages will grow
faster as the sector is still relatively under-mortgaged.
The report shows that Buy to Let has spread the
reach of the private rented sector into areas that had little or no
private renting before. This has had the knock-on effect of reviving
housing markets and assisting in inner city regeneration.
In the mid-1990s less than half the PRS was owned
by individuals, now they own two- thirds of the sector. This is due
not only to individual desire to invest in property but also because
corporate organisations have been running down their property
assets.
This private ownership has occurred without the
vast majority of Buy to Let investors becoming financially
stretched. Investor landlords have substantial cushions of their own
wealth, including equity in owner-occupation, employment and other
non-rental income.
Without Buy to Let, the ARLA 10 year report
asserts, the Private Rented Sector would be a lot smaller.
A shrunken Private Rented Sector would have
provided for less choice in housing and standards would have
suffered. Competition between landlords in the provision of rented
property has brought considerable gains to households in rented
accommodation. This is one of the reasons why more people rent.
The benefits of renting appeal particularly to
young mobile people. Changing lifestyles, affluence, employment
patterns and financial circumstances have combined to encourage more
younger people to rent rather than own their homes, as they may have
done in previous decades. However, most tenants will build up
savings, maybe have children, and so – the report suggests - succumb
to the benefits of home ownership.
But today, many young people are moving to home
ownership at least a decade later in life than they did before.
Commenting on the report, ARLA Chief Executive
Adrian Turner said, “ARLA went out on a limb to launch the modern
concept of Buy to Let in September 1996, backed by a far-seeing
panel of mortgage lenders. Our aim was to bring more and better
quality property to the Private Rented Sector. Ten years on we are
the first to admit that we could never have foreseen the success
this was to be for investor landlords, their tenants and the Private
Rented Sector.”
ARLA, the lead professional body for the Private
Rented Sector, was backed in the then breakthrough concept by the
ARLA Panel of Mortgage Lenders. The original panel of Birmingham
Midshires (then known as Halifax Mortgage Services), Mortgage
Express and Paragon Mortgages was quickly joined by NatWest followed
by GMAC RFC and The Mortgage Business.
The full report, “Buy to Let, The Revolution – 10
Years On” is available in pdf format to download below:
ARLA Buy To Let Report 2006 904k
