Immigration boom is good for B2L

The influx of migrant workers may be bad news for the public services but it could be good for buy-to-let investors, who should increase their involvement in the sector, says Nicola Severn.

The recently leaked government report on immigration may have warned of a crisis for Britain’s schools, housing and welfare services but is the news all bad? For buy-to-let investors the influx of migrant workers may be something to be celebrated rather than feared.

The document written by Home Office minister Joan Ryan revealed that every government department has been ordered to draw up emergency plans to deal with the influx of immigrants.

Although the government seems confident that immigration is under control this report confirms that immigration is reaching record levels and the number of people entering the UK is outstripping the volume previously predicted.

National Insurance figures released last month revealed that 662,000 immigrants were given the right to work in the UK in 1995 and according to the government’s figures migration will account for 80% of population growth in the next 10 years.

Unsurprisingly, these figures have led many to raise concerns over this country’s capacity to provide for such a population increase. But although immigration on this scale may place pressure on public services and the benefits system, the private rental sector could use the situation to its advantage.

It is a myth that asylum seekers make up the majority of immigrants to the UK. Refugees and others granted special leave to remain under the asylum rules account for only 10% of immigration to Britain. For most, immigration is a positive choice, offering a better standard of living and the opportunity to be involved in secure paid employment.

By nature, such newly formed households tend to rent rather than buy. Indeed, the Council of Mortgage Lenders reports that only 20% of migrants become home owners within three years. This is good news for landlords.

Immigrants represent a viable tenant type. Most are migrant workers rather than students, and typically they represent a stable, long-term customer base. One in three plan to stay for between one and three years while 15% intend to stay indefinitely or permanently.

According to the latest Paragon Mortgages buy-to-let trends survey, landlords are optimistic that tenant demand will rise over the next few years and immigration is a contributory factor. According to the research, landlords have an average of 3.5 non-British tenants and 47% expect rental demand from immigrants to increase over the next few years.

It is obvious that increased numbers of single-person households, students and inward migration will lead to a growing pressure on housing stock, and it is inevitable that a steady growth in the role of the private rented sector will be needed to meet the country’s housing requirements.

As a result of this, buy-to-let investors will be well placed to take advantage of these changes and they can maximise their opportunities by increasing their involvement in the buy-to-let sector.