Sieze the property bull

Seize the property bull by the horns

Whilst static house prices and a nationwide need for prudency may be the order of the day for most, the bear market in the property industry needn’t spell doom and gloom for all. Aside from the positive indicators that the property market is now moving, there is one side of the coin that could indicate a bull market is on the horizon for today’s buy to let landlords. Figures from Countrywide, the UK's largest letting agent, show that the number of tenants entering the market has reached unprecedented levels. In Q2 Countrywide saw over 50,000 new tenant applications and they are strongly of the belief that tenant demand is outstripping supply which will lead to a significant shortage.

With the current squeeze on available finance, the requirement for sizeable deposits and restricted mortgage lending, it is no wonder that more and more individuals are struggling to purchase a home of their own. In addition, increasing student dept and a stagnant labour market are storing up affordability problems for the next generation. With this in mind there is no doubt that the current pressure on the rental market will not dissolve any time soon. This coupled with the increasing number of under-30s choosing to rent as a positive lifestyle choice due to the financial and geographical freedom it provides, means that the strain on the private rental sector is more acute than ever. Although this is obviously worrying news for tenants it can only spell good news for the landlords who supply the market. Although no one can expect the same levels of capital return on property investment seen a decade ago, now is arguably a great time to buy. Purchasers are in a strong position to strike a bargain and high tenant demand not only indicates that rental voids will be few and far between, but also provides the opportunity to increase rents and maximise yields.

Everyone knows that buying to let should be a long term strategy. According to the Office for National Statistics the UK population is projected to increase to 65 million by 2016, there is little confidence that developers will build enough new homes to meet this demand. The law of supply and demand has to indicate that although house prices may be stable at present it’s only a matter of time before property values will increase. The canny investor is in a great position to cash in now and in the future.