Some commentators are saying buy to let is about to die, with the new stamp duty changes and how mortgage tax relief will be calculated. Some say 500,000 rental properties will flood the market nationally in the next 12 months as landlords leave the rental market. Have you heard the phrase ‘Bad news sells newspapers’? Let me explain why buy to let in Bingham is only going in one direction – and not the direction the papers say they are going.
According to Sheffield University, buy to let landlords will continue fuelling the growth of the private rented sector in the coming decades. By their estimates (and they are considered a centre of excellence on the topic), the rate of homeownership nationally will fall to 50% (today it is 77.4% in Bingham) by 2032, while the rate of private sector renting will increase to 35% (interestingly, in Bingham it stands at 10.6% today).
Therefore, the demand for rental accommodation in Bingham will grow by 85 households in the next five years ...
Bingham property values over the last six years have risen a lot more than average wages/salaries. As homeownership and mortgage availability is dependent on your ability to pay this has served to push home ownership further out of reach for many - at a time when the stock of council houses has actually withered. (Nationally, the number of council houses in the last ten years has dropped from 3.16m to 2.18m households - a drop of 31.1%).
Now it’s true the Conservative’s efforts to fix the deficiency of affordable housing have focused on those who want to buy a home, ranging from Help to Buy and their much vaunted Help to Buy ISA, and Starter Homes Scheme, an initiative offering a 20% discount for first time buyers … but if you are unable to save for the deposit ... none of this means anything to the ‘20 something’s’ of Bingham ... and they still need a roof over their heads!
Currently, 929 people live in private rented accommodation in Bingham
These are big numbers and a sizeable chunk of the electorate. So whilst it appears Bingham “Generation Rent” youngsters will continue to rent and to not to buy for the reasons set out above, Bingham buy-to-let landlords will be lifted by the projections of greater rental demand. Bingham and the area around it still offers the prospect of strong economic growth forecasts and has a reputation as a lively and desirable place to live.
So, by 2021, the number of rental properties in Bingham will rise to 584
This prediction in growth of the Bingham rental market is even on the back of the government clamping down on tax reliefs for landlords. The point is this, gone are the days of making guaranteed returns on BTL property. For the last 20 to 30 years, irrespective of which property you bought, making decent money on buy to let property was like shooting fish in a barrel – anyone could do it - but not now. You must take a more considered approach to your existing and future portfolio, especially in Bingham. The balance of capital growth and yield, especially in this low interest rate world we live in, means Bingham landlords need to do more homework to ensure the investment in property gives the desired returns.