Generation Rent

12 March 2017

Once upon a time the archetypical image of a tenant was a twenty something sharing a flat with his/her friends but it appears that Generation Rent now includes a significantly older profile.

The recently published English Housing Survey has found that out of a total rental population of 4.53million households there are now 1.038million in the 35 to 44 age group which is over 1/2million more than a decade ago. 

The trends remains aggressively upward with the number of older and family renters set to increase significantly in the coming years as house purchase continues to be an impossible financial possibility for an increasing number.

The same survey also found that an increasing proportion of the older generation have entirely paid off their mortgages and hold around £1.5trillion of equity.  They have also amassed £1.2trillion worth of buy-to let properties.

Will Landlords Sell?

Despite the best efforts of the government to dampen the buy-to let market with the stamp duty surcharge; the phasing out of higher rate tax relief on mortgage payments and tougher lending rules from September it appears that the clear majority of existing landlords are looking to sit tight rather than sell off their portfolios. 

Only 10% of those existing landlords surveyed have plans to head for the exit although more than 25% admit that they have stopped acquiring new properties for the time being.

Around two thirds of landlords don’t have mortgages on their properties.

As the rental sector becomes more and more multi-generational the demand for rental properties continues on an inevitably increase.  Indeed for many renting is now the norm, they have become used to the freedom and flexibility that it provides.

Despite the deterrent effect of the government’s legislation many existing and new landlords continue to see the financial advantages of operating in this market.

Guess the Government’s Intention

The absence of any comment on the problematic state of the housing market by Philip Hammond in his budget speech last week has baffled many.

Maybe he is waiting for the autumn by which time the housing white paper proposals will have been formulated into real policy?  Some hope that as an ex property developer Hammond will show sympathy to the housing market and reduce the stamp duty charges.  They will be holding off moving/buying into the market in the hope that charges will be lower later in the year. Others fear that the cost of Brexit will reduce the Chancellor’s opportunity to do the housing sector any special favours and that stamp duty will remain unaffected.

Either way the absence by the Chancellor of any mention of housing in his financial review was a surprise to most.

A Good Time to Invest

Interestingly we are continuing to experience strong demand from new investors keen to get into the buy to let sector despite the uncertainties currently surrounding the market.  We continue to assist many new (and existing) clients take advantage of the high quality investment opportunities that we have identified so if you are considering becoming an investor please get in touch for a free, no obligation discussion.

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