(1888PressRelease)
July 14, 2007 - There were good tidings for the UK buy-to-let investor this week as a number of industry bodies acknowledged that the present housing crisis shows no sign of abating and will not be solved by quick-fix measures. Most also agree that simply building more houses is not the way forward.
For example on Wednesday, the Campaign to Protect Rural England (CPRE) responded to Gordon Brown's proposals to tackle the housing crisis by, among other things, increasing the use of brownfield land for the development of new homes.
Paul Miner, planning campaigner for the CPRE, believes that this will do little to solve the problem because "new housing stock forms a very tiny proportion of the overall housing stock". He explained that house prices are thus set by the going rates on existing stock rather than by new builds.
He added: "This has actually been recognised by the government's own review of housing supply carried out by Kate Barker - which recommended quite a large-scale increase in house building. Even in her review, she recognised that significantly increasing the supply of housing would have little or no effect on prices."
So why is all this good news for the buy-to-let investor? Well, residential landlords always have a key target market. This is often dependent on property type, price and location and typical examples include housing for students, young professionals or nurses.
However, all landlords stand to benefit when the housing climate stands as it does now. People are finding it increasingly difficult to acquire a property of their own.
Rising house prices mean bigger deposits and more stamp duty, and of course a bigger mortgage. Often this will be for full or near full loan-to-value and mortgage periods in excess of 25 years are now common.
Interest rates have risen continuously since last August and these increases too show no signs of abating.
The Bank of England implements base rate rises in an effort to curb inflation, but has revealed recently that it is still concerned about indicators such as consumer spending which indicate that inflation is not back under control.
The most recent rate rise took the base rate to 5.75 per cent and many analysts have said that they expect to see the base rate reach six per cent by the end of the year.
All of this means that landlords can expect to see strong demand for rental property in the foreseeable future, which may be enough to prompt people thinking about investing in a buy to let property to take the plunge.
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