A study assessing the impact of the "credit crunch" on the buy-to-let market in the South of England

Popat, Suraj (2010) A study assessing the impact of the "credit crunch" on the buy-to-let market in the South of England. BSc dissertation, University of Portsmouth.

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    Abstract

    Government statistics play a vital role in showing the importance of the role of the buy-to-let market in the housing provision for housing within the UK. The rapid expansion of the sector is mainly due to the high appreciation experienced over the last fifty years. However, current global credit restraints shattered the confidence of banks and investors alike, leading to a tightening of credit and subsequently a downturn in property values. This report seeks to investigate the impact of the phenomenon popularly described as the ‘credit crunch’ on the buy-to-let market. This review takes place at a time of revival for the private rented sector. In 1974, a prediction from the Conservative Political Centre stated: “the private landlord, as he exists now and has existed, will, within a generation, be almost as extinct as the dinosaur. There is nothing that can be done about this” (Patten, 1974). This investigation aims to establish the emergence of the buy-to-let market through a variation of factors placed upon the housing market. The ‘credit crunch’, the conditions that created it, the factors that influenced it, and the impact it had itself including the tightening of credit and the fall in property values across the UK are assessed. Primary research included a series of interviews with professionals within the industry including developers and mortgage/estate agents, with the aim of discussing how market conditions have affected potential investors within the buy-to-let market. Investor confidence and perceptions are key in assessing the extent of what is considered a ‘safe’ investment. Property is still seen to be one of, if not the safest form of investment due to the perception that eventually prices will return to pre-‘credit crunch’ levels. This, combined with low interest rates, is the reason we have not seen a large scale of portfolio’s being sold. Equity levels are of paramount importance when dealing with the current problems. The common phrase that portfolio holders are cash rich but equity poor must be rectified to ensure further expansion of the sector.

    Item Type: Dissertation
    Departments/Research Groups: ?? EDAM ??
    Depositing User: Jane Polwin
    Date Deposited: 20 Jan 2011 12:49
    Last Modified: 28 Jan 2015 11:16
    URI: http://eprints.port.ac.uk/id/eprint/1004

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