Buy-to-let boom: one in five homes now owned by landlords

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Courtesy of Richard Dyson @ The Telegraph:

Private landlords now own almost one out of five homes in Britain and they will buy a further million in the next five years, according to new research highlighting the phenomenal growth of buy-to-let.
The figure, along with other startling statistics about this increasingly popular form of investment, provides the latest snapshot of Britain’s changing housing market as fewer people own and more rent.

An army of two million private landlords now own and rent out five million properties, according to the report by mortgage lender Paragon. This means 18pc of households now rent from private landlords. And the proportion is growing, as investors continue to see property as a source of future income and profit.
The Government’s own figures suggest that by 2032, more than one in three properties will be owned by private landlords.

The report “18 Years of Buy-to-Let” drew on information from a range of sources and was published to mark the eighteenth year since the “invention” of buy-to-let. That was 1996, the first year in which mortgages specially aimed at private landlords were made available.

The number of properties owned via buy-to-let grew has almost doubled in the period, it said, and is now worth a total £1 trillion.

Buy-to-let became hugely popular in the housing boom of 2005-2007 when property investment “clubs” proliferated and thousands of investors bought newly-built flats without even viewing them. But the widely-predicted bust never followed. The banking crisis led to a mortgage drought which prevented younger generations from buying, and instead swelled the pool of renters. At the same time plunging interest rates cut mortgage costs and helped many amateur landlords hang onto to their properties, even if they were in negative equity.

The buy-to-let boom has gathered pace in the past few years with mortgage lending rising at over 20pc per year and the number of available landlord loans now topping 700.

Paragon welcomed the trend, claiming “the creation of buy-to-let has very much been a force for good. It has helped to shape a private rented rector that is fit for purpose and provides choice, value and flexibility for tenants.”

But such figures spark anger among younger renters locked out of the housing market. Dan Wilson Craw of Generation Rent, the lobby group for tenants and housing reform said: “This sort of data shows how the market isn’t operating properly and has become a vicious cycle. More people are attracted to buy-to-let which drives up property prices, in turn trapping more tenants into renting for longer. There are parts of the country now where there really is no prospect of home ownership for many people and it is difficult to see how that will change.”

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