Real Estate Investor Magazine South Africa March 2016 | Page 53

rates on cash. The value of private rented homes in
Britain is now 1,29Tn, which is up 55% in the past
5 years, while the number of new homes has only
increased by 28%. The numbers indicate that there
is an ever increasing concentration of wealth in
the already wealthy hands. Investors who acquire
properties in London tend to build portfolios of buy
to let properties.
There is a continual supply problem of new homes
in the Greater London area. The London housing
market is characterized by high prices relative to
incomes being earned by London residents. This
means that the cost of buying a home is a significant
barrier to new home buyers. The re emergence of
mortgage competition, and government help to buy
schemes will increase the numbers that are able to
buy. However the underlying factors contributing to
the unaffordable housing market are likely to remain
in place forcing many Londoners to be tenants for
life unable to accumulate sufficient deposits for
acquisition as they continue to pay high monthly
rentals for accommodation. This underpins the private
rental sector which will continue to grow in number
of households and value.
The current London loan to value of buy to let
London properties averages only 26% which suggests
that wealthy individuals are increasing their property
portfolio’s with fairly low gearing.