The UK buy to let market is alive and kicking

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Despite the attempts of many politicians and so-called “property experts” the UK buy to let market is still alive and kicking. While the authorities continue to milk more tax from the property market it is easy to fall into the trap of believing the market has peaked. There are a number of reasons why the UK buy to let market will continue to grow despite the attempts of politicians to rein in property prices and property investment.

Immigration

Over the last few months there has been much focus on Brexit and the forthcoming UK exit from the European Union. While it may take a few years to finalise the U.K.’s withdrawal there are already a number of myths, untruths and blatant lies regarding immigration. The idea that immigration will suddenly stop once the UK leaves the European Union is folly and extremely misleading.

Even if, and this will not happen, all immigration from Europe was to halt in the UK there is still immigration from around the world. Let’s not forget that the European Union represents less than 10% of the worldwide trade market and is nowhere near as important as many would have you believe. Indeed, the UK government will likely vet those looking to move to the UK (similar to the Australian system) to ensure that they have specific skills to offer the UK economy.

Demand for property

Demand for property in the UK is still relatively strong even during these uncertain times as politicians fight amongst themselves regarding the U.K.’s exit from the European Union. A flurry of UK property companies have stepped forward to suggest the market is still relatively strong although there are number of uncertainties in the short to medium term. Indeed some areas of the UK have actually seen a strengthening of demand for property and property prices since the Brexit vote.

Sceptics will point to the fact that it will take two years to negotiate the U.K.’s exit from the European Union once Article 50 has been triggered. A lot can happen during this time but let us turn the tables have a look at the European Union. This is not exactly an economy built on hard rock more an economy with a soft centre and a lack of foundations. We only need to look at Greece to see what could happen to a number of other European Union members unless significant changes are made.

Affordability factor

Despite promises by governments to introduce an array of affordable housing for those looking to climb onto the property ladder for the first time, first-time buyers are still struggling. Many are now looking towards shared ownership with various housing associations which will allow them to at least get their foot on the ladder. However, they are effectively entering into property transactions which they cannot afford and which will ultimately push prices higher.

Even in the current low interest rate environment it is proving difficult for first-time buyers who can afford properties to accumulate the relatively large deposits required. As a consequence, many will be forced to look to the rental market while they accumulate their deposit which will feed the buy to let sector. In what could become a vicious circle, as more people look towards the rental market in the short term this will push prices further and further away from their reach.

So, there we have it, the UK buy to let market is very much alive and kicking.

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