x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

Decline of buy-to-let prompts ‘exciting time for renters’, says JLL

The number of properties acquired by landlords has dropped significantly over the past couple of years following the tax and regulatory clampdown, prompting a leading banking body to downgrade its forecast for buy-to-let lending in 2018.

UK Finance said buy-to-let activity was slower than anticipated so far this year, with lending falling faster than expected as many landlords hold back from buying property in response to significant tax changes and tighter lending rules.

At the start of the year, UK Finance had predicted £12bn of buy-to-let lending for residential property acquisitions in 2018, but with fewer people investing in the buy-to-let sector, Jackie Bennett, director of mortgages, estimates that lending will likely hit just £9bn this year.

“This is undoubtedly the impact of various tax, regulatory and legislative changes that have happened to landlords in the buy-to-let sector,” she said last week.

Although less favourable tax treatments and higher stamp duty have ‘dampened’ the role buy-to-let investors play in the housing market, as reflected by a slump in lending to buy-to-let landlords, reducing the new supply of much needed private rented stock from private landlords, this trend does appear to have a “silver lining for tenants”, according to JLL.

The company points to the fact that a “new type of investor will flood the buy-to-let market” providing renters with an “alternative tenant experience” and digital construction and milestone infrastructure projects “will offer plenty of opportunities for the industry in the next few years”.

Adam Challis, head of UK Residential Research at JLL, commented: “Government initiatives have unwittingly caused a step change in the rental market, sparked by a decrease in uptake of buy-to-let mortgages by individual landlords, put off by muted house price growth and lack of financial incentives.

“This gap in the market is accelerating investment by their institutional counterparts, providing tenants with a new reality when it comes to renting – one where they are less exposed to ‘amateur’ landlords and more likely to be dealing with a well-organised corporate entity with a real commitment to tenant service.”

JLL predicts a bright future for the UK housing market. A new phase of affordability and a sharp rise in confidence are forecast, taking hold first in London and the South where prices will rise quickly assuming the deal on Brexit is agreed by Parliament. 

It forecasts that house prices across the UK will rise by 11.4% in the next five years, supported by growth in the number of UK housing transactions per annum which it forecasts will hit 1.15m in 2019 rising to 1.32m in 2023.

Challis said: “The expected upswing in the market over the next five years is predicted amidst a difficult era where uncertainty surrounding Brexit has dented consumer confidence, casting a shadow over personal finances and negatively impacting the UK housing market.

“However, JLL believes that there is a 90% probability of a Brexit deal being negotiated, which will enable the UK economy to steadily improve during 2019 and into 2020. With UK earnings growth set to return to a more normal rate of 4% pa by 2021, real wage growth and more modest property price increases will unlock transactions that have been hampered by a lack of affordability.

“From 2021, we expect greater economic certainty to improve business and consumer confidence, which will lead to a more buoyant housing market and a return to growth in house prices.”

  • icon

    Sounds all well and good but we are seeing zero building in our area and supply demand is falling firmly into favour for landlords

  • icon

    Demand is high in our area, but the rent we can expect to get is still geared to affordability.

  • icon

    Who is JLL ? are they experts with a crystal ball ? no i don't buy it, just some bright sparks opinion .

  • icon

    Well seeing how we're doing crystal ball's...
    Yrs corporate are entering the sector, but business had share holders and they like returns! Give them 5 yrs loss of rent through arrears, damage, constant refurbishment and legal/professional costs....
    They will then realise yields are too low, rents will rise and some will restructure and sell up..
    Don't presume this is a positive move, corporate landlords have greater resources for faster evictions too

icon

Please login to comment

valpal
submit
sign up