Why the buy to let market will remain strong for many years to come

It is easy to get wrapped up in the apparent doom and gloom surrounding the UK and in particular the UK property market. Despite the fact that so-called “experts” have been highly critical of the U.K.’s prospects in light of Brexit we have yet to see any real consequences. We know the talks are ongoing, they will not be easy but the expected drop-off in confidence in the UK economy in light of last year’s vote has not yet emerged. So, in light of all this uncertainty why will the UK buy to let market remain strong from many years to come?

Different scenarios

If we take a look at various scenarios surrounding the UK economy you will see how the prospects for the buy to let market still remain strong in the longer term.

Subdued economy

In the event of a subdued economy after the Brexit negotiations this will mean that fewer people in the UK can afford to buy a property. They will still need to “chase” employment opportunities which will result in increased demand for private rental properties across the country. We have seen this situation in years gone by and the reality is it will return if the economy does start to struggle.

Prosperous economy

If, as many people predict, the UK economy is prosperous in the longer term then this will increase the number of outright property sales as well as private rentals. The fact is that the more prosperous the economy the more people will look to purchase property which will push prices higher. This will price some people out of the market hence they will move towards the buy to let arena and underlying demand for rental property will remain strong going forward.

Is it really a win-win situation?

Whether people choose to acquire property outright, go down the social housing route or look to the private rental market, the UK population continues to grow as does demand for homes. The subdued and prosperous economic scenarios we highlighted above show how whatever happens there will continue to be strong demand for private rental properties. Even though politicians are yet again promising hundreds of thousands of newbuilds per year they have failed to deliver on a regular basis, so what is different this time?

Buy to let market

The buy to let market has been hit by an array of tax increases over the last couple of years and in reality the market is still coming to terms with these changes. Historically markets do adapt and re-evaluate after significant changes such as these additional taxes and there is no reason to think it will be any different this time. One thing we have seen is a divergence in buy to let investment patterns which are now spread more evenly across the UK as opposed to being focused on London and the South.

The simple fact is that while political parties fight to form the next government, and a chronic shortage of newbuilds, the situation is getting worse. Politicians have had many years to address the issue of a shortage of newbuilds and while there have promised the earth, they have failed to deliver. As a consequence, buy to let investors will be an integral part of the rental market going forward – attempting to address the chronic shortage of houses across the country.

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