With the launch of the Buy-to-Let initiative, the strength and importance of the rental market has been underlined with a flourish. Once again, rentals are fully understood to be such a key element in the housing market that private investors in the sector are being actively backed by mortgage lenders.
And, not since the golden age of the Edwardians, when 90 percent of all housing was rented, has the private rented sector looked so attractive to private investors. Today, the rental market may only stand at some 11 percent, after dropping to an all time low of just seven percent in 1989, but real growth has been achieved since then, and is forecast to continue.
This growth was helped by the Housing Act 1988. It de-regulated the rental market while providing a legal framework that has proved fair to both landlords and tenants. This Housing Act brought properties back on to the rental market just in time to meet a surge in demand caused by the recession. Since then the demand for rented housing has proved to be much more than a blip on the once ever-upward sales graph for owner-occupied housing. New working practices have brought about a major change in the social climate. It has not been as dramatic as the 1980s drive for owner-occupation, but it has been as relentless. It fulfills the need for choice in housing, for flexibility and mobility. It has made renting socially acceptable again.
Changing working patterns are a primary cause. Contract working has led people to budget more carefully, to ensure that they are free to move around as employment dictates and to spend less time on the responsibilities of owner occupation.
It has effected all age groups and economic classes, not only the youngsters who once looked to buy starter-homes. Couples, often both working, may want to move quickly to more lucrative opportunities. Ambitious career-builders delay starting a family and rent either a town house or a weekend cottage. They have no time to take full responsibility for both. And, with increasing frequency, for those approaching retirement or even the retired, the relentless rental revolution has made life simpler.
To match the overall growth in renting since de-regulation, the number of specialist letting agents has also risen. Now they can be found in virtually every part of the country. These agents are mostly members of those professional bodies like ARLA that require proper client accounting and business practices, high levels of indemnity cover and fidelity bonding to cover the company. They have boosted the growth of the private rented sector by ensuring that de-regulation of a complex market has not led to chaos.
Their numbers and the order they have preserved in the rental market for both landlords and tenants, has encouraged a change in the attitude of lenders to private rental investment. Professional letting and managing agents enhance the prospect of good covenant tenants renting well-managed properties. With the changes in the legal framework proven and the steadily growing demand for quality rental property matched by self-regulating professional agents, mortgage lenders will accept the risk of assisting private landlords with competitive interest rates.
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