Recently we have seen a real buzz develop around the buy to let market, with an increase in the number of high street lenders offering buy to let mortgages, a wider range of properties available and a real diversification of the landlord demographic.
Certainly, the market shows no signs of slowing, young landlords looking for long term financial security are growing rapidly in the number and the market as a whole has seen a growth of 10% in the past few years as investors see buy to let properties as a safe and secure investment when compared to the ups and downs of the stock market.
So what is sustaining this seemingly continuous demand for rental property? Recent speculation suggests that we can attribute some of the, 84 billion-pound, markets current success to the growing number of foreign people coming to work in the UK. It was estimated in 2006, that over a two year period more than half a million people travelled to the UK from countries that have recently become members of the EU, either to find employment or seek work under their own steam as self employed.
The influx of these foreign workers has bought a certain degree of stability to the buy to let market. Fluctuation in rental demand is natural but if landlords are suffering long periods of tenant vacancy or poor rental income it can pose huge problems. Foreign workers are providing such ideal tenant potential, not just now but for the future, because often their time spent in the UK may be done so with a view to eventually returning home. Obviously this is not always the case but on such occasions rental properties offer the perfect solution to short term accommodation.
There also seems to be a slight culture change amongst the potential buyers in their twenties who do not want to be tied down with a large mortgage and prefer the freedom of renting a property and see purchasing as something to consider when they wish to settle down with a partner. Rushing into marriage at an early age is not on the agenda for many who are young free and single. Renting a buy to let property does not represent a commitment.
It is not just foreign workers filling any possible tenant vacancy landlords may usually face. With the increasing levels of difficulty facing first time property buyers looking to make that first step onto the property ladder, more and more people are being forced to live in rented accommodation whilst saving up the necessary deposit. All of this is encouraging landlords to continue to invest in buy to let properties and build up their portfolios to meet the current and predicted future rental demand.
There maybe questions over how long this market buoyancy can survive. It is true that incomes in EU countries such as Poland are gradually rising. So the possible choice of some foreign workers to, return home early or not to leave their home country all, could lead to an eventual slow down in the tenant influx. However as the demand for land to develop and build remains unabated as we do not have enough quality homes to service the current population let alone an ever growing one.
Such a slow down in the current levels of Polish people coming here is unlikely to create voids in the rental market,with the introduction of Bulgaria and Romania into the European Union later this year. The government is placing regulations on the numbers of workers this EU membership will allow to migrate to the UK. But nevertheless I think it is sensible to assume that, with young foreign workers already having had a noticeable positive impact on the UK economy, new membership of the EU will bring fresh arrival of potential tenants. A blessing to landlords, who want to ensure that the returns a successful buy to let investment can offer, can be sustained well into the future.
