Leading specialist mortgage lender Paragon has found that the buy-to-let market is continuing to grow at an extraordinary rate.
Private landlords own almost 20% of all homes in Britain, says Paragon.
And it expects this figure to grow, with an estimated one million properties being added to the private rental sector in the next five years.
Around two million private landlords own and rent out about five million homes to tenants in the UK. The Government forecasts this to grow to one in three properties by 2032.
Paragon has been tracking the sector since it began in 1996 – the first year that buy-to-let mortgages were available.
The report estimates that buy-to-let properties are now worth around £1 trillion in total.
Between 2005-07, buy-to-let accelerated, with the housing boom fuelling investment among private landlords. However, the financial crisis and recession caused a decline in mortgage approval, forcing young people to rent and thus increasing the proportion of tenants.
In the last few years, the buy-to-let market has continued to boom, with mortgage providers reporting a rise of 20% per year. There are now more than 700 buy-to-let loans available.
A Paragon spokesperson says: “The creation of buy-to-let has very much been a force for good. It has helped to shape a private rented sector that is fit for purpose and provides choice, value and flexibility for tenants.”
However, there is a group of young, aspiring homeowners who are now priced out of the market. This demographic is known as generation rent, and it is fitting that the organisation that represents them uses the same name.
Dan Wilson, of Generation Rent, comments on Paragon’s report: “This sort of data shows how the market isn’t operating properly and has become a vicious cycle.
“More people are attracted to buy-to-let, which drives up property prices, in turn trapping more tenants into renting for longer. There are parts of the country now where there really is no prospect of homeownership for many people and it is difficult to see how that will change.”
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