Buy to let and the reconfiguration of Londons housing market Steve Wilcox University of York

Buy to let and the reconfiguration of Londons housing market Housing market trends House Purchase Affordability Intermediate Housing Market Private Rents Affordability Renting and Buying Future trends and PRS policy issues

Housing market trends House price to income ratios Mortgage cost to income ratios Regional trends

Housing market affordability in Great Britain All full time earnings and first time buyer house prices

Regional trends in home owner affordability

Underlying factors Sustained economic growth Lower interest rates Inadequate housing supply Availability buy to let mortgages Growth in private rented sector

Household growth and house building

Growth in new buy to let mortgages Source : CML website : New advances per half year

Growth in private rented sector in England SEH : Households

Growth in private rented sector in London CLG : Dwellings

Upturn in wider Private Rented Sector & lettings to Housing Benefit claimants Data for Great Britain

Nearly a half of all moves each year are into the private rented sector in England

In London over a half of all moves each year are into the private rented sector SEH : 2006/07

Non decent homes in the PRS Source : English House Condition Survey

Housing market affordability in 2006 House price to income ratios Intermediate Housing Market Affordability of private rents Renting and Buying compared

House price to income ratios in 2006

Key

Broad and narrow intermediate housing markets Not in work In work but on HB Not on HB but cannot buy at LD level Cannot buy at LQ level Can buy at LQ level Narrow intermediate housing market Broad intermediate housing market

Broad and Narrow Intermediate Housing Market in 2006

Proportion of working households in the Intermediate housing market in 2006 Key

House prices, mortgage costs, rents and earnings compared (1994 = 100) First time buyer house prices and mortgage costs

Affordability of private rents and mortgage costs in 2006

Rents as a proportion of mortgage costs in 2006 Key

Future prospects for private renting Demographics & demand Investment returns Crunches & Cycles Fiscal & policy regimes

2004 projections for London

Commercial rental returns (UK) Return Income 5.7% 4.8% 4.0% 3.7% 3.5% Capital 10.8% 14.1% 6.1% 5.6% 4.3%12.8% Total 17.0% 19.6% 10.4% 9.5% 8.1%16.8% Source : IPD UK Residential Index – based on portfolio of 9,040 dwellings

Rental returns ( Central London) Return Income 4.1% 3.0% 3.3% 3.1% 2.8% 3.1% Capital 10.8% 14.1% 6.1% 5.6% 4.3% 8.9% Total 12.5% 10.8% 3.1% 7.6% 5.5% 12.3% Source : IPD UK Residential Index

Rental returns ( Inner London) Return Income 5.6% 4.6% 4.0% 4.1% 3.8% 3.9% Capital 15.8% 13.7% 2.4% 1.8% 5.1%10.1% Total 22.2% 18.9% 6.5% 5.9% 9.0%14.4% Source : IPD UK Residential Index

Fiscal & Policy Regimes The Rugg Review Capital Gains Tax Reforms Institutional landlords or better product? Private renting and mixed communities