The growth of the private rented sector,
and the arrival of an investor class of buy to let landlords within it, is an
issue that won’t be going away anytime soon, no matter what you read in the
Daily Mail, I said, as I chatted over a coffee with a landlord client of mine
at Palmieri’s Coffee Shop on the Furze Platt Road. Whether you are a landlord
of mine (or not as the case maybe), I am always happy to look over any
properties you are thinking of buying for buy to let purposes and more so over
a coffee!
Some commentators are saying buy to let is
about to die, with the new stamp duty changes and how mortgage tax relief will be
calculated. Some say 500,000 rental properties will flood the market nationally
in the next 12 months as landlords leave the rental market. Have you heard the
phrase ‘Bad news sells newspapers’? Let me explain why buy to let in Maidenhead
is only going in one direction – and not the direction the papers say they are
going.
According to Sheffield University, buy to let
landlords will continue fuelling the growth of the private rented sector in the
coming decades. By their estimates (and they are considered a centre of
excellence on the topic), the rate of homeownership nationally will fall to 50%
(today it is 70.7% in Maidenhead) by 2032, while the rate of private sector renting
will increase to 35% (interestingly, in Maidenhead it stands at 14.4% today).
Therefore, the demand for rental
accommodation in Maidenhead will grow by 749 households in the next five years ...
and these are the reasons why, irrespective of the distractions set out in the
newspapers
Maidenhead property values over the last
six years have risen a lot more than average wages/salaries, meaning as
homeownership and mortgage availability is dependent on your ability to pay has
served to push home ownership further out of reach for many, at a time when the
stock of council houses has actually withered. (Nationally, the number of
council houses in the last ten years has dropped from 3.16m to 2.18m households
- a drop of 31.1%).
Now it’s true the Tory’s efforts to fix the
deficiency of affordable housing have focused on those who want to buy a home,
ranging from Help to Buy and their much vaunted Help to Buy Isa, and Starter
Homes Scheme, an initiative offering a 20% discount for first time buyers … but
if you are unable to save for the deposit ... none of this means anything to
the ‘20 something’s’ of Maidenhead ... and they still need a roof over their
heads!
Currently, 9,102 people live in private
rented accommodation in Maidenhead
These are big numbers and a sizeable chunk
of the electorate. So whilst it appears Maidenhead “Generation Rent” youngsters
will continue to rent and not buy for the reasons set out above, Maidenhead
buy-to-let landlords will be lifted by the projections of greater rental
demand. Maidenhead and the area around it still offers the prospect of strong
economic growth forecasts and has a reputation as a lively and desirable place
to live. You see, with the new rules on tax, more and more landlords will be
looking to move away from the previous honeypot of central London, because its higher
prices meant lower rental yields. With the new tax rules and central London’s
cooling of house price inflation, more and more landlords will look further
afield, including Maidenhead (interestingly, I have already been chatting to a
few central London landlords after they read the Maidenhead Property Blog).
So, by 2021, the number of rental
properties in Maidenhead will rise to 5,149
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