British buy-to-let market to shrink by 2/3- report
LONDON, Aug 18 (Reuters) - The amount of privately rented accommodation in Britain is likely to shrink by about two-thirds in the next few years as more investors pile out of the buy-to-let market, savings group Skandia said on Monday.
Skandia said up to 18 billion pounds ($33.70 billion) of equity was likely to be released from UK housing as the stock of buy-to-let mortgages collapsed to 44 billion pounds from 120 billion pounds at the end of 2007.
Skandia, a unit of insurance group Old Mutual (OML.L), said the market was likely to contract sharply after a period of extraordinary growth and would revert to historical levels, without specifying the time frame.
The company cited data from the Council of Mortgage Lenders to show the stock of UK buy-to-let mortgages was just 2 billion pounds in 1998, since when the market has grown to about one in 10 of all UK mortgage loans from less than one in 100.
Skandia said falling house prices -- the market is about 10 percent down from last year's peak levels -- plus higher debt costs in the wake of the global credit crunch and sluggish rental growth would lead to more landlord house sales.
"Higher mortgage rates and falling property prices will cause investors to reconsider their exposure to residential property and many will choose a more diversified approach," Nick Poyntz-Wright, chief executive of Skandia UK, said.
Skandia did not address whether a rush of buy-to-let investors for the exit doors might exacerbate falls in the housing market and bite deeper into the equity built up by investors after a decade-long bull market.
Britain's biggest buy-to-let lender Bradford & Bingley BB.L said on Monday that investors had taken up only 27.8 percent of its 400 million pound rights issue, illustrating its struggle to raise funds in the face of a fast-deteriorating UK economy. Double click [ID:nLI682369] to read the full story.
(Reporting by William Kemble-Diaz; editing by Karen Foster)
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