View more on these topics

Private progress

Renting has traditionally been considered the domain of young singles or students, a perception which the buy-to-let market has helped to shift. It has been a little over 10 years since the concept of buy to let was introduced and we have since seen the market grow at an incredible rate.

The fact that it now plays a vital role in meeting increasing demand in the UK housing market is clearly behind the Government’s thinking as it announced an independent review into the private rented sector. The review aims to improve the Government’s understanding of the sector, predict market changes and determine what the Government can do to influence and support changes.

As the market has grown, so has the scope of stakeholders in the market. In the same way that there are more tenants than ever before, so there are more investors, lenders, intermediaries, products and bodies such as the NLA and Arla. Only with the input of each of these parties will the review accurately represent the market. With the sector seemingly providing an easy target for doom mongers, it is hoped that this will paint a true picture of a strong market.

First, the review aims to look at the composition of the private rented sector and regional characteristics. This is a crucial point to note. There are numerous regional differences across the UK’s buy-to-let market. The BM Solutions buy-to-let bi-annual review demonstrated a range of returns in 2007 from 11 per cent in the East Midlands to a staggering 44.3 per cent in Northern Ireland.

Coupled with the well publicised differences in house prices, the Government needs to be able to understand the context of the market by assessing each region.

Another point that the review seeks to address is the impact of demographic and social change. This factor has made a huge impression on the market through the increase in tenant demand.

First, there is the issue of first-time buyer afford-ability, which has seen the average age of a first-time buyer rise and means that more are renting for longer.

However, it is not just affordability that has driven this trend. The review is likely to discover that more people are choosing to rent. Many young professionals are looking to retain flexibility in the early stages of their career which cannot necessarily be fulfilled as a homeowner.

An increasing student population has also fed into the growing tenant demand, as has increasing levels of immigration. Tenant demand certainly does not show any sign of slowing at the moment so it will be interesting to see the predictions of the review.

From a supply perspective, a wide range of landlords have also become involved with the sector. Every day, investors have turned to the buy-to-let sector as they create a balanced investment portfolio. The last 10 years have also seen the advent of the so-called accidental landlord as some make an investment decision to let out their old property rather than sell. This is alongside the growth of portfolio landlords managing several properties. The review will need to understand the different approach of these sets of landlords.

Within a commercial environment, lenders have already had to identify and adapt to the market in this way. This has been evident with the evolution of product ranges and criteria, such as options of pay rate calculations.

While it is important for the Government to understand the basis of the market, it suggests that this will also feed into a regulatory evaluation of the sector. We have already seen the Tenancy Deposit Scheme and HMO licensing impact on the market. In the case of BM Solutions, making our products available only through regulated intermediaries means the market is already treated as a regulated market.

It is only right that a market with the standing of the private rented sector should be the subject of an independent review. However, it is only through use that it will prove its worth. It must not pay lip service to the sector – but establish an accurate view and determine any priorities for change in the future.


Seismic shift

I have detected a change in attitude towards the retail distribution review among advisers and life companies over the last four weeks. Throughout meetings, conferences and lunchtime discussions, the general tone towards the RDR has been increasingly supportive.

Newcastle BS profits up 52 per cent

Newcastle Building Society group profits are up 52 per cent to £17.6m in 2007. The society has seen a 48 per cent increase in other income to the year ended December 31, 2007, largely its Solutions business and increasing demand for investment products through Newcastle Financial Services. Despite a turbulent second half of 2007, it […]

The right way ahead

I am a regular reader of John Greenwood’s column and appreciate the insight he provides on industry issues but last week’s article on third-way products contained a series of inaccuracies that need to be addressed.

Clean sweep

Those of you who know me well might be surprised to see me writing about a clean energy fund as I am not particularly known for my ethical or environmental beliefs.For a fund of this nature to attract my attention, it must be something special.Before we move on to the fund in question, it may […]

Allianz Technology Trust – April 2017

Welcome to the latest update for Allianz Technology Trust PLC from the Trust’s portfolio manager, Walter Price. Portfolio review The Trust’s NAV returned 4.3% , outperforming the Dow Jones World Technology Index return of 2.8%. In US dollar terms, the portfolio gained 4.8%. During the month, stock selection contributed to relative performance, and industry allocation […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm