For many, finding somewhere to live has become a seemingly impossible task, and an issue for those lucky enough to get their hands on a buy-to-let property.
Buy-to-let is the fastest growing section of the British housing market, and now accounts for almost a third of all properties being bought. People have increasingly turned to the investment market as rents have become unaffordable, especially for first-time buyers.
By buying a buy-to-let property, landlords have the ability to take advantage of this surge in demand and therefore increase their income. As investors make profits by capitalising on the growing demand for rental properties, there is a temptation to charge astronomical rents and turn a quick profit.
However, as incomes fall below the national average, those renting have nowhere to turn when their rent is too high. Thus, rising rents can make it impossible for those on lower incomes to afford to live in the area. For people who lack sufficient savings, moving away from their home is increasingly likely, especially as rents continue to climb.
This issue is not unique to renters, as homeowners are also having a difficult time raising the funds to renovate their property. Many investors are spending up to 5-10% of their property’s price on the renovations themselves.
Secondly, today’s investors have more freedom than ever to act as landlords. The tightening of lending rules in the past few years has meant that many would-be landlords who were previously unable to afford mortgages have been able to enjoy the benefits of property as an investment.
In most cases, the increase in income is not being directly reinvested into the property, but instead used to pay existing debts. Instead of having to pay to rent the space, investors are able to pocket these profits.