Nationwide’s specialist lender says immigration from other EU countries has given significant support to the sector and is unlikely to decline over the next few years, despite predictions to the contrary.
Recent moves by the government and the Conservatives have sparked fears of a negative effect on the buy-to-market market in areas where there are high levels of foreign workers.
The Tories have outlined plans to control the number of immigrants because of concerns over rising house prices and the government has re-stricted immigration from Bulgaria and Romania.
But government figures show 427,000 workers from Eastern Europe registered to work in the UK between May 2004 and June 2006. When the number of self-employed is included the total figure is believed to be closer to 600,000.
Keith Astill, managing director at UCB Home Loans, says: “Most of these people are renting and in some parts of the country form an important part of the rental community for buy-to-let properties.”
He adds that a downturn in the sector is unlikely. He says if this were to occur and a slowdown in the flow of immigrants into the UK was deemed to have led to a fall in demand for rental property, it’s likely that regulations would be reversed to allow in more workers.
Astill also rejects concerns recently expressed by the Council of Mortgage Lenders that the revival of the equities market could be a threat to investment in buy-to-let. He argues that the two markets carry very different profiles in terms of risk and liquidity.
He says: “If equities continue to outperform property over the next couple of years I would not be surprised if this had a slight negative effect on buy-to-let purchases. But this will be much smaller than some expect because professional landlords are unlikely to pull back.
“Also, the relatively easy access to funding – provided you have the minimum deposit and are able to cover fees – coupled with the UK’s fondness for investing in property, are important and consistent factors behind the strength of the buy-to-let sector.”