Home ownership in the UK, or anywhere else for that matter, is a privilege more than a right.  That being said, even though the country is struggling through tough economic times, home ownership is still the main goal for many young people.  That goal is transitioning into something entirely different.  Now, living under the roof of parents and saving for the first rental property is the new norm.  All the factors are there for the buy to let market to prosper for years to come.  Mortgage lending continues to be tight.  First home deposits are difficult to swing due to the stagnation of wages which has taken place.  And, low interest rates are making it impossible to benefit from saving money.

Capital Economics predicts that by the year 2015, almost 20% growth will have taken place in the private rental sector.  This is up from just over 14%.

There are many, including John Heron of Paragon Mortgages, who believe that by the year 2020, 20% of all households will be living in a private rental type dwelling.  It is safe to say this would represent a cultural shift in how parents and children view the future of housing.  Savings plans would change.  Investment strategies would also change forever.  This would create a shift in the different types of mortgage lending.

Julian Rance, director of sales at Paragon, commented on tenant demand, saying: “Brokers need to think laterally about how they can help landlord clients.  There are plenty of opportunities for straightforward purchase and remortgage cases where the landlord is switching from one lender to another or to a new product, but how else can they help clients?

“For example, it is more difficult for landlords to raise capital to fund new purchases in a slow housing market, but with approximately two thirds of private rented properties unencumbered, landlords can release equity from these properties to fund new purchases.

“Brokers can mine their books to see which landlord clients were previously active in buy-to-let and have slowed in recent years; it may be that they are struggling to raise fresh capital while sitting on a portfolio of lowly geared or unencumbered properties.”