by Mark Johnston
Housing Eviction at a High!
Recent research has shown that the buy to let sector is still booming!
The popularity of buy to let flourished during the financial crisis with low interest rates pushing savers to invest their money in property where rental income yields are far higher than they could achieve on a savings account.
It seems that buy to let landlords are benefitting from the government’s funding for lending scheme which has meant that mortgage rates have fallen significantly and they have also benefitted from rising rents.
According to Countrywide, the UK’s largest estate agency and lettings network, monthly letting index rents rose to a two year high in August this year, therefore meaning that the average rent is now around £867 per month.
The demand for rental property in many local markets now outweighs supply which has forced rents upward.
The council of mortgage lenders (CML) head of policy Jackie Bennett said: “Strong rental demand is contributing to the continuing expansion of the buy to let sector”.
According to current data released by the bank of England lending to buy to let landlords has increased by around 29 per cent in the three months to the end of June 2013, compared to the same time last year.
The Council of Mortgage Lenders (CML) data showed £5.1 billion was advanced to landlords in the three months to the end of June, up 21 per cent on the first quarter.
George Spencer, chief executive officer of Rentify, the online lettings company, said “This growth is fuelled by a renewed appetite from investors, both experienced and novice alike, along with better availability of buy to let mortgages at lower rates and with looser criteria than at any time in the past five years.”
Industry insiders have predicted that the Bank of England’s low rates pledge will propel further growth in the sector.
However, despite this boom in the buy to let sector it appears that all is not good!
New figures have revealed that the number of evictions have now risen to record levels.
The number of tenants who have been evicted from rental properties by their landlords have reached the highest level in five years.
Some experts believe that the rising cost of renting coupled with stagnant wage inflation is behind the increase in evictions. Although other experts feel that the governments new ‘bedroom tax’ initiative is more likely to be blamed.
The bedroom tax, which was introduced in April this year, has meant a reduction of housing benefit for claimants if they have ‘spare bedrooms ‘. This has come at a time when tenants on benefits are already struggle to meet the rent.
The thing is Landlords are also under a lot of pressure to meet their mortgage payments on buy to let investments.
All this said the fact is due to the strong rental market many more landlords are now even more than before willing to evict ‘problem’ tenants as they now feel safe in the knowledge that a replacement tenant will be easily found.
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