Buy to Let: A Guide

Buy to Let: Background

Born in the mid-1990s, Britain’s buy to let market has grown rapidly. Not surprisingly, this has resulted in a fundamental shift in property ownership in the private residential rented sector, which has had knock-on effects on the entire property market. Before buy to let took off, most of the sector was owned by corporate investors. Today, around 66 per cent is in private hands.

A variety of factors have contributed to this change. One is that companies have reduced their property portfolios. Another is that more of us see owning property as desirable, enticed by the prospects of extra income from rent in the short-term and healthy capital appreciation in the future. The increasing availability of buy to let mortgages has brought second (or even multiple) property ownership within the reach of increasing numbers. Add to this the continuing disillusionment with pension schemes and a perception that investing in UK property carries relatively low risks, and it is little wonder that many people regard a buy to let investment as a key financial goal.

The Buy to Let market

In 1998, there were 29,000 buy to let mortgages; today, there are 750,000. Though the phenomenal growth of the sector has led some commentators to predict a oversupply of rented property, the consensus seems to be that the rental market will continue buoyant well into the future, thanks to an influx of workers from new EU member states, high prices preventing young people from getting on the property ladder, and other factors.

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