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Demand for housing in the UK continues to outstrip supply, despite measures to improve the buy-to-let sector and help people get a foot on to the property ladder. The lack of decent housing has been the main reason why UK house prices have increased at such a fast pace in recent years. That trend is set to continue because the growing population is forecast to push prices up even more over the coming years. The Office for National Statistics predicts that the population in the UK could rise from 65.6 million in 2016 to 74 million in 2039, which will continue to push up property prices if new builds do not keep up with the expected 8.4 million rise in the population over the next 22 years. This would make it even less likely for young people to be able to afford to buy their own home, and underlies the urgent need for more decent private rentals.

The news has brought renewed criticism of the government’s ‘anti-landlord’ policies and calls for a U-turn on its decision to phase out mortgage interest relief, scrap the wear-and-tear allowance, and impose a 3% stamp duty surcharge on second homes. Jonathan Stephens, Surrenden Invest managing director said it would be wise for buy-to-let investors to be encouraged and not penalised with population forecasts like these.

The forecast of an increasing population and the fact that more people will be turning to rented accommodation means the buy-to-let and build-to-rent sectors are healthy investments for today and for the foreseeable future. More corporate investors and pension scheme holders are putting their funds into build-to-rents. However, overseas investment is dropping. The proportion of overseas landlords with a property portfolio in the UK has fallen from 12% in 2010 to just 5% today, according to research by international estate agency group, Countrywide. It is believed that tougher tax measures and political uncertainty over Brexit have been contributing factors. London has been hit the hardest, with one in 10 homes let this year being owned by an overseas landlord, compared to one in four in 2010. In 2010, 39% of all overseas landlords in the capital were based in Europe, but now they account for 28%. They have been overtaken by Asia-based landlords, who now own 33% of those rental properties in London that are owned by overseas investors.

Another overseas sector which is continuing to show confidence in the British rental sector is the expats. Skipton International has received mortgage enquiries in the UK buy-to-let sector worth more than £500 million from expats already this year. The figures to the end of July represent a 130% rise in interest for expat mortgages, compared to the same period last year. Of these, 24% of enquiries were from British expats in the United Arab Emirates, followed by 12.5% in the USA. Skipton International director of lending, Nigel Pascoe, said buy-to-lets continue to look interesting to British expats looking at long-term UK investments, despite the tax changes affecting landlords.

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