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Following on from a period of economic unrest since 2007, the housing market has seen a remarkable change with steady growth throughout 2013 being a major contributor in what is set to be a buy to let boom of 2014. The growth in house prices along with steady rental prices, and an increase in mortgage lending has attracted more landlords to consider adding to their portfolio with the bonus of potential capital growth.
Only 12 months ago, price increases were only developing steadily across properties in the London and Southern areas, whereas statistics from the end of 2013 have seen a boost nationwide. The average house price has seen a steady increase, lowering the risk of a potential housing bubble, thus showing encouraging signs for potential buyers with an influx of mortgages secured reflecting this data.
The Government’s Help to Buy Scheme along with other helpful incentives have certainly been a key element to stimulating demand within the housing market, but despite total lending still being down on pre-crisis levels in 2007, current figures are encouraging for any prospective developers. Countrywide – the national agency for lettings, showed that rents were up over 4 percent over the previous 12 months nationwide, further adding to the incentives for landlords to invest in the coming year.
Therefore lenders are predicting a moderate spike in landlords expanding their borrowing this year, which also demonstrates little sign of waning for the demand of rental property. However problems associated with the responsibilities of being a landlord still prevail, with problem tenants still posing difficulties for some. The introduction of the Universal Credit System is certainly one aspect that landlords need to be wary of, as tenants see a cap on benefits. This has brought into dispute whether landlords should consider tenants in receipt of benefits, with many at risk of being limited to social housing and lengthy waiting lists.
It’s certainly important for landlords to consider investing in background checks for prospective tenants. Letting agents can take on the responsibility of many of these but often with a hefty fee. However there are many online companies that offer background checks to landlords on an independent basis, reducing the costs involved. The National Landlords Association offers a basic tenant report for a small fee, and other sites offer more comprehensive checks also. But with that obviously comes responsibility to cover all aspects of maintaining the property, chasing bad debt or bad tenants. The additional costs associated with letting agents can therefore be a welcome add-on for many landlords.
Overall with the property market looking healthier than it has in several years, as house prices steadily increase along with rental rates, it is no surprising that predictions are set for widespread developing in 2014. With property prices still remaining fairly low also, competition for buy to let homes could be quite high, as landlords see the potential of investing at such a good time. And as a buy to let boom unfolds within the next 12 months, the UK is likely to see further welcome strengthening of the economy.
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