November 6, 2023 10:23 am

Insert Lead Generation
Nikka Sulton

Landlords Worried as Buy-to-Let Profits Shrink. A recent survey has brought to light a growing concern among landlords, with more than 60% expressing reservations about the attractiveness of private renting as an investment choice. This survey, conducted by the Yorkshire Building Society, aimed to gauge the sentiments of 500 landlords across the UK. The findings suggest a significant shift in the landscape of rental housing, raising questions about its implications for various segments of the population.

One of the noteworthy insights from this survey is the alarming shortage of private rented housing, which may have far-reaching consequences. This scarcity in rental properties is particularly worrisome, as it could potentially leave those in need of housing assistance in a precarious situation. The survey’s data revealed that the disenchanted landlords are currently serving a diverse group of tenants. These include couples with dependent children, making up 34% of their tenant base, single-parent households at 18%, individuals with low income constituting 9%, and those with disabilities accounting for 4%. This multifaceted challenge underscores the broader issue of housing availability and affordability in the UK.

As the property landscape continues to evolve, it’s becoming increasingly apparent that a collaborative effort is required to address the changing dynamics of the rental market. The concerns raised by landlords, as reflected in this survey, have wider implications on social and housing policies. Finding sustainable solutions to the housing shortage and addressing the needs of vulnerable groups should be a priority. The coming years will likely see various stakeholders, including the government and housing associations, working together to create a more stable and inclusive housing market that benefits both landlords and tenants alike.

However, it’s notable that the commitment of the majority of private landlords to addressing the housing shortfall remains steadfast. An impressive two-thirds of these landlords express their intention to continue their involvement in the rental market for a minimum of five additional years. This steadfast resolve underscores their dedication to providing a valuable service in the face of numerous challenges. However, it’s not all smooth sailing, as close to two-fifths of landlords believe that the government should take more active steps to support the rental sector. They argue that recent changes in regulations and taxation have added complexities that make it increasingly challenging to operate profitably in the property rental business.

This survey is a key part of the building society’s Home Truths report, a comprehensive research effort that goes beyond the perspective of landlords. It also includes insights gathered from 500 first-time homebuyers and 500 remortgagers. This holistic approach aims to provide a well-rounded view of the property market and its various stakeholders.

The survey’s results offer a clear picture of the hurdles facing prospective investors in the property market. The increased cost of living, the persistently high house prices, and interest rates that haven’t been seen at these levels for nearly two decades are the primary obstacles hampering people’s ability to invest in real estate. These challenges have a ripple effect on the entire housing market, from first-time buyers to seasoned landlords, making it imperative for the government and policymakers to consider solutions that address these concerns.

However, a significant portion of first-time buyers, almost two-fifths, who are planning to make a purchase in the next year, have clear motivations. More than half of them seek to stop the money drain of rent payments, while nearly a third have plans to renovate and create their own ‘place to call home.’ Additionally, around two-fifths aspire to buy property as an investment.

The landscape of mortgage borrowers is evolving, with a growing minority no longer fitting the conventional mold. This shift is a consequence of changing societal dynamics.

Consequently, nearly four out of every five first-time buyers and a similar number of remortgagers believe that homeownership is fast becoming an exclusive privilege. This trend is attributed to various factors, including changes in income structures and the continuous rise in house prices.

Ben Merritt, the director of mortgages at , notes that changing family dynamics, such as increased life expectancy leading to more multigenerational households, and shifts in employment trends with more people working independently or as contractors, have led to unstructured incomes. Additionally, the changes brought about by the global pandemic, like the move to hybrid working, are influencing what people seek in a home and, consequently, their borrowing requirements.

Merritt emphasized that as a mutual building society, they are adapting to these evolving challenges with innovative, out-of-the-box solutions, staying true to their original mission dating back to 1864. They are committed to providing modern borrowers with tailored pathways to homeownership.

The findings also reveal that consumers are taking significant steps to overcome affordability challenges and achieve their homeownership goals. Nearly nine out of every ten individuals are making responsible lifestyle choices to prioritize what is often their most substantial investment.

Many individuals are making significant adjustments in their lives to achieve their homeownership goals. Over half of them are willing to sacrifice holidays, while half are cutting back on dining out, and two-fifths are reducing their spending on new technology. Nearly all first-time buyers in the survey are diligently saving for a deposit, with an average expected time frame of about four and a half years to reach their goal.

Another trend emerging is that people are purchasing homes at a later stage in life and opting for longer mortgage terms. The research shows that the average age of first-time buyers participating in the study is 35, and 58% of them have postponed their home purchase due to the current economic conditions.

Moreover, seven out of ten mortgage holders are contemplating extending the terms of their mortgages, with four-fifths of them planning to carry their mortgage into retirement. The average age they expect to pay off their mortgage extends to nearly 70.

For almost one-third of first-time buyers, seeking financial support from their parents is a viable option, while around one in ten turn to wider family members like grandparents, aunts, and uncles for assistance.

Ben Merritt, the director of mortgages at Yorkshire Building Society, underscores the importance of the findings in the report. He emphasizes the need for innovative solutions from lenders and government stakeholders to ensure that the mortgage and housing markets continue to meet the evolving needs of current and future generations. 

Merritt also observes that there is a positive shift in financial responsibility, as people are taking the commitment of homeownership more seriously. After nearly two decades of relatively affordable credit, it’s encouraging to see individuals adopting better financial habits, which will benefit them in various aspects of their lives.


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