Carpe Diem - buying v. letting

24 June 2011

Generally, the current economic outlook is still cloudy, but starting to brighten. The UK economy did experience a slow growth in the first three months of 2011, but it seems this modest improvement has so far been insufficient to pull the housing market out of its torpor. In May, the Nationwide House Price Index reported a 0.3% rise in house prices. Although this is encouraging, the price of a typical home remains 1.2% lower than this time last year.

Business investment and net trade are expected to drive the economy forward in the quarters ahead, and in time, this will feed through to boost households and support the housing market.

Until then, it seems letting is key. Buy-to-let mortgage holders may be interested to hear that the rental market is set to increase. The demand for rent continued to grow last month: the Royal Institution of Chartered Surveyors stated that due to the limited supply of new properties on the lettings market, “the cost of renting is increasing and will continue to do so”.

The Genesis Housing Association has claimed that by the next decade, there will be two million fewer home-owners in the UK. Similarly, Halifax Building Society recently predicted that Britain could become “a nation of renters within a generation” as young people increasingly give up on buying their own homes.

So, it’s still best to hold off buying homes. But if you are in a position to buy-to-let, seize the day and take advantage of the thriving rental market.

Of course, many people don’t want to be bothered with the hassles that come with purchasing and managing rental property. For these people, there is our popular FFP Lite programme. This has been specifically tailored to suit people who would like to benefit from the trend, but don’t have either the resources or desire to purchase buy-to-let property. It allows you to buy a “chunk” of a successful rental portfolio, enjoy the monthly rewards, and not be required to deal with any rental management headaches. For more information, see the FFP Lite section of our website.