Don’t sell your home, become a landlord instead
Charlie Cochrane, 41, a British Airways pilot, never intended to be a landlord. So when he and his wife, Lesley, 41, a stewardess, put their four-bedroom house near Win-chester on the market last August for £695,000, they assumed they would sell quickly and move into a new home in the west Surrey town of Farnham, where their three children are already at school. Nearly a year later, however, and with £70,000 knocked off the price tag, their property has still not sold, and the Cochranes have reluctantly decided to let it out, accepting they may have to rent for a while in Farnham.Richard Collins, who owns a recruitment business, didn’t expect to be a tenant again either – at least not at the age of 35 and as the owner of a seven-bedroom West Sussex farmhouse valued at £2.5m. However, he and his wife, Christianne, 34, want to move with their two children, Milo, 7, and Freya, 4, to the Surrey hills, but cannot afford to buy until they have sold their home in Kird-ford, near Petworth, which has been languishing on the market, at its valuation price, since April. With their son due to start school in Surrey in September, the pressure is on the Collinses to find somewhere to rent. “It’s not great having to go into rented accommodation,” says Richard. “It’s never your own home, and you can’t do the same to a rented house as you can to your own.”
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Buy-to-let booms in 2008
Landlords pick up the slack from weaker housing market.
Demand for rented accommodation in May has boomed 41% year on year according to new data from an estate agent, a leading UK lettings agent. Lease commencements were up 41% in May 2008 from May 2007. Tenant demand increased month on month as well – the number of leases commencing in May 2008 rose 14% from April 2008.Managing Director of a national estate agent, David Newnes, said: “Mortgage finance is hard to come by these days – the rental market is definitely picking up the slack. And we’ve seen a considerable number of would-be buyers put house purchase on hold because of the squeeze on their finances. They’re turning to the rented sector while money is tight.”
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Housebuilding drop may help rental market
The number of new homes built is set to go on falling, it has been predicted.Construction firms will build increasingly less homes as the residential buying markets continues to be hit by the credit crunch, the House Builders Association has forecast, with the number of new residences being completed numbering only 110,000 this year and potentially dipping to 80,000 in 2009, numbers comparable with the 1930s when Britain was suffering from the great depression.
Spokesman Roger Humber commented: “House builders are not going to be starting new sites, they”re going to be laying people off, they may even be mothballing sites.”
The lack of new homes may be to the advantage of those with Buy to Let Mortgages, as those looking to get on the housing ladder may have less choice and could opt to rent instead while they wait for the market to pick up again.
Last week the Financial Times blogger Jim Pickard said government targets for over 200,000 new homes to be built each year were looking “increasingly hallucinogenic”.
Less than 100,000 homes to be built this year, say builders
The number of new homes constructed is set to fall dramatically this year, as housebuilders react to slowing demand for property.According to senior housebuilders quoted in a report from the Observer, just 100,000 homes will be completed in 2008.
This compares with a figure of 170,000 for 2007 and is the lowest number of newbuilds to be constructed since 1945.
Mark Clare, chief executive of Barratt, said: “The small guys have pulled out and the big companies…are not opening new developments.
“I think it certainly will be around 100,000 and if there’s a further deterioration, it will go under 100,000″.
Mr Clare’s sentiments were echoed by Alan Cherry, chairman of Countryside Properties, who identified the affordable housing sector as set to be the hardest hit, with builders scrapping plans to construct these properties as they “move to protect margins”.
The slowdown is predicted to limit the likelihood that Gordon Brown’s target for new homes will be met.
Mr Brown has set a target of 280,000 new homes to be built every year, which it is claimed are needed to house the three million new households expected by 2018.
Government must ‘focus on supply of rental property’
A think tank has called for the government to do more to provide enough rental accommodation to meet soaring demand.
The Centre for Cities (CFC) has claimed that the government has focussed its policies unduly on homeownership and that conversely not enough attention has been paid to ensuring there are enough homes for rent.
This has been a mistake, the body argues, because owning a home puts people who are vulnerable at a high risk of repossession.
Dermot Finch, director of the CFC, said: “The government is focusing too much on home ownership, and not enough on homes for rent.
“Demand for rented housing is increasing all the time – but supply isn’t keeping up. Unless this changes, the young and job movers will have difficulties finding somewhere decent to live.”
The calls from the organisation come after the Department for Communities and Local Government committee recently said that 50,000 new rental properties are needed annually to cope with demand.
