Buy-to-let Keeps On Growing

Despite all the claims that buy-to-let's doomsday was just around the corner, investors are continuing to defy the pessimistic pundits and enter the market, new evidence has shown.nnThe number of buy-to-let mortgages rose by 37 per cent in the year to August 2007, according to the latest statistics by the Council of Mortgage Lenders (CML), which said this trend had helped to prop up an otherwise cooling housing market. nnCertainly, the buy-to-let trend contrasts with the residential market, where the number of home loans in August fell from 111,000 in 2006 to 99,000 in 2007. CML director general Michael Coogan said: "Affordability clearly remains challenging but there may be some relief for borrowers with expectations of an interest rate cut, perhaps as early as November," which may offer a change of fortunes in the residential sector. But even with interest rates static at 5.75 per cent the buy-to-let sector rolls on relentlessly. nnThe question may now be asked of just how much the industry is going to grow? Will Britain become increasingly a nation of renters just as, ironically, traditional renters like the French become homeowners? Will buy-to-let grow in both good times and bad for the rest of the housing market? Will it ultimately grow out of necessity as targets for new house building are not met? nnMalcolm Harrison, a spokesperson for the Association of Residential Letting Agents (Arla) said the answer was that buy-to-let still had some expanding to do, but not to the extent that other countries might be familiar with. nnHe said: "I don't think we'll ever get to the proportion of renting that you see in Europe and North America, actually. All our forecasts suggest that the private rented sector will increase from its current 11 per cent of all housing to round about 15 per cent of all housing in the next ten years." nnMr Harrison added that the private rented sector "nearly died" in the 1980s (when home ownership expanded) but was revived partly because of the rise of buy-to-let, which brought "better standards" into the sector. nnEven so, Mr Harrison pointed out, the current number of buy-to-let mortgages is around 900,000, which is around a third of the rental market. Thus the issue of what proportion of the UK housing market will be rental at any time in the future will depend only partly on the expansion of industry, with the propensity for other property owners to rent out accommodation also being a factor. nnBesides which, it may just be that buy-to-let will only grow to reach 15 per cent of the UK housing market because the culture of home ownership, far from shriveling up and dying, will create more pressure for the kinds of measures from the market and government alike to make it easier for people to get on the housing ladder. nnThus, if the expansion of the buy-to-let market is a finite entity, perhaps now, while there is still growth, is the time to invest. This in turn may explain why the sun is still shining on buy-to-let mortgages while other markets feel an autumnal chill.