Take-up of rental property now tends to be owned by small first-time buy-to-let landlords buying small properties compared with 10 years ago when the main players in this market were banks, suggests a CML special report.
Details of the buy-to-let marketing briefing suggests not only has the number of single property buy-to-let landlords grown to 30%, but the number of landlords holding 250 properties or more has dropped to 6% compared with one in five owners in 1994.
"We have relatively little information about the types of property being purchased under buy-to-let. Anecdotal evidence from lenders suggests they tend to be smaller properties at the modest end of the price spectrum," says the Council of Mortgage Lenders.
"Our 2000 benchmarking study found that the average price of a buy-to-let property was around £78,000 compared with £100,000 for an average house. Acccording to Paragon, by 2004 this had risen to £127,800, about 85% of the average property now, continues the report.
This contrasts significantly with evidence presented by the Association of Residential Letting Agents – the body which sparked the buy-to-let revolution – indicates the average value of rental properties in Q4 2003 was £332,600 for a house and £202,700 for a flat compared with an average price of £163,584.
The CML special article pulls together an array of data from mortgage providers, associations, trade bodies and research houses in an attempt to establish whether the BTL market offers long-term stability or short-term volatility.
Among the issues raised, the CML notes the long-term prosperity could be damaged if the housing bubble were to burst as some landlords might be forced to sell up and pull out of the market.
That said, the market is still relatively young to the consumer mind, so the mortgage body has commissioned research from De Montford University to look at expanding the range and quality of data available on the private rental sector and buy-to-let.
A consumer survey will also be commissioned at a later date to better establish the future intentions of the market and property owners.IFAonline
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