Why you should consider investing in the buy-to-let market
If you follow the news on a regular basis it can be difficult to decide if buy-to-let investment is a good thing or not. Of course, in the end only you can decide that for yourself. But there are hard facts available which you should take into consideration when making your decision:
The current state of the rental market:
• The private rental market provides approximately 10 per cent of all homes in the UK and this figure is rising
• As house prices rise, potential first-time buyers are choosing to rent rather than buy. There has also been an increase in the number of migrant workers, expanding the rental market even further.
• The annual rate of return on buy-to-let property, including rent income and capital appreciation, is more than 11 per cent for cash purchases and more than 21 per cent for geared investments (Source - Association of Residential Letting Agents - ARLA). By comparison, pension funds are growing at between 2.5 and five per cent a year.
• Three per cent of homeowners are now buy-to-let landlords - a figure set to double by 2010 (Source: Mintel).
• During the three months to the end of May 2007, rents rose for the fourth quarter running. Void periods have fallen to an average of 24 days. (Source: ARLA).
The rental market of the future:
• New property development is not keeping pace with housing demand. Current government figures show that 250,000 new homes are needed each year: only 150,000 are actually built.
• Latest government figures predict that twice as many homes will be required in the UK by 2016.
• This shortfall of suitable property is causing prices to rise: the value of UK property doubles every 10-12 years (Source: Office of the Deputy Prime Minister - ODPM).
• Statistics show that young people expect to move locations every couple of years early on in their careers, so they don’t want to be tied to one location.
• The European Union is continuing to expand, bringing with it an influx of workers from the new member states.
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