A History of Buy-to-Let
Property investing is a relatively new phenomenon in the UK. Prior to 1990 the rented sector was dominated by the Government. The private rented sector only began to emerge once the Government changed its housing policy and mortgage lenders introduced specialist buy-to-let products.
In the post-war period of 1945 to 1980 UK Government policy worked against the private rented sector. A combination of housing policies existed that stifled the possibility of ordinary individuals profiting from owning and renting out residential property.
To begin with there was a large council housing scheme that provided rental accommodation for non-homeowners. The accommodation was supplied by the Government at a local level and rent was collected accordingly. In addition to this there were strict rent controls in place as well as tax concessions for owner-occupiers.
During this period the Government controlled a massive scheme to build homes for UK residents. In contrast there are virtually no dwellings being built by today's Government.
The buy-to-let industry can probably trace its roots back to the 1980's when the Thatcher Government began to encourage council tenants to buy the properties they were renting. A "right-to-buy" scheme was introduced that allowed council tenants to buy their properties for a significant discount. During this period the private rented sector also began to emerge because fewer people were renting properties from the Government and instead were more open to renting from private landlords.
Property investment really began to take off in the 1990's thanks to a small group of lenders who began to offer specialist buy-to-let mortgage products. There were six lenders in total and they collectively founded the Association of Rental Letting Agents (ARLA).
In addition to the availability of buy-to-let mortgages, the private rented market experienced a period of growth due to several social and economic factors. These included increases in the number of small households, net immigration, the number of students, and an increase in the average age of first-time-buyers. The combination of these factors lead to an increase in the number of households and the number of tenants wishing to rent property.
Ever since 1996, when the ARLA panel of lenders introduced buy-to-let mortgage products to the UK market, property prices have experienced strong growth. The property market has consistently outperformed the equities market and for this reason more and more individuals have added at least one buy-to-let property to their portfolio of investments.
Many investors who bought property as early as 1996 have experienced high returns on the capital value of their properties. This has allowed them to remortgage in order to release equity and buy even more property with the proceeds. Additionally, people who did not invest early have witnessed the returns the early investors have experienced and have also purchased buy-to-let property, hoping for similar medium to long-term gains.
These factors have combined to ensure that the property market remains strong and that prices continue to rise beyond the rate of inflation each year. The buy-to-let mortgage market has also flourished in line with the property market. In 1999 there were 70,000 outstanding buy-to-let mortgages in the UK. In 2006 the number has increased ten-fold to 700,000.
UKMortgageSource provides up-to-date information on Buy-to-Let Mortgages This article is free for republishing
Source: http://www.articlealley.com/article_112747_33.htm
In the post-war period of 1945 to 1980 UK Government policy worked against the private rented sector. A combination of housing policies existed that stifled the possibility of ordinary individuals profiting from owning and renting out residential property.
To begin with there was a large council housing scheme that provided rental accommodation for non-homeowners. The accommodation was supplied by the Government at a local level and rent was collected accordingly. In addition to this there were strict rent controls in place as well as tax concessions for owner-occupiers.
During this period the Government controlled a massive scheme to build homes for UK residents. In contrast there are virtually no dwellings being built by today's Government.
The buy-to-let industry can probably trace its roots back to the 1980's when the Thatcher Government began to encourage council tenants to buy the properties they were renting. A "right-to-buy" scheme was introduced that allowed council tenants to buy their properties for a significant discount. During this period the private rented sector also began to emerge because fewer people were renting properties from the Government and instead were more open to renting from private landlords.
Property investment really began to take off in the 1990's thanks to a small group of lenders who began to offer specialist buy-to-let mortgage products. There were six lenders in total and they collectively founded the Association of Rental Letting Agents (ARLA).
In addition to the availability of buy-to-let mortgages, the private rented market experienced a period of growth due to several social and economic factors. These included increases in the number of small households, net immigration, the number of students, and an increase in the average age of first-time-buyers. The combination of these factors lead to an increase in the number of households and the number of tenants wishing to rent property.
Ever since 1996, when the ARLA panel of lenders introduced buy-to-let mortgage products to the UK market, property prices have experienced strong growth. The property market has consistently outperformed the equities market and for this reason more and more individuals have added at least one buy-to-let property to their portfolio of investments.
Many investors who bought property as early as 1996 have experienced high returns on the capital value of their properties. This has allowed them to remortgage in order to release equity and buy even more property with the proceeds. Additionally, people who did not invest early have witnessed the returns the early investors have experienced and have also purchased buy-to-let property, hoping for similar medium to long-term gains.
These factors have combined to ensure that the property market remains strong and that prices continue to rise beyond the rate of inflation each year. The buy-to-let mortgage market has also flourished in line with the property market. In 1999 there were 70,000 outstanding buy-to-let mortgages in the UK. In 2006 the number has increased ten-fold to 700,000.
UKMortgageSource provides up-to-date information on Buy-to-Let Mortgages This article is free for republishing
Source: http://www.articlealley.com/article_112747_33.htm
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