Today's report reveals that UK investors increasingly view property as THE alternative to the stocksmarket and insured types of investment.

 

Property has long since been in favour as a leading investment of choice, even moreso nowadays, as the UK becomes more like our European cousin's who choose to rent-to-live rather than buy-to-live. 

This is because UK wonna-buyers feel increasingly less able to obtain a loan and are therefore, compelled to rent longer-term rather than as a temporary arrangement prior to purchase (see Blog 24th October 2011, Property Market, Are You A Trapped Renter?). 

Since the mid-20th century, British mentality has sought property ownership as a means of securing the family, financial future. This desire accelerated during the mid-90's with the availability of Buy-to-Let opportunity.

 

Following the economic bungling by the banks that lead to 2008's global recession, today's rigid lending criteria is forcing many away from the first rung of the property ladder as they cannot see any way of buying a property within the forseeable future. 

This lack of available credit however, means landlords can only benefit, assuming they bought right in the first place, and the market has seen average rental yields rise between 1-2% per month in 2011 with little sign this will slow anytime soon. 

The number of investor/landlords who gave rental returns as their 1st reason to invest has risen from 25% to 41% in 2011.  With current lower capital growth from property (making it more attractive to buy) coupled with poor returns from other investments, deposit accounts, ISA's and pensions, BTL property is seen as a safer haven. 

In former days, 10-15% of gross annual earnings would service a typical residential mortgage so, paying less than this amount made renting appealing. Nowadays, average rents exceed £700 pcm (£8,400pa), which represents 25% of the UK national average earnings of *£33,000.

Assuming a renter could obtain a mortgage, £700pcm would service a mortgage in excess of £200,000 (4%APR)! 

 

 

*http://career-advice.monster.co.uk/salary-benefits/pay-salary-advice/uk-average-salary-graphs/article.aspx

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