The idea, currently being explored by the Government, could mean the introduction of a separate planning class for new-build residential property that will be rented out, and would mark a fundamental shift in the structure of the UK housing market.

Institutions and property companies would own, and trade, these ‘build to rent’ developments.

Asset management company Schroders believes that this buying and selling activity between profit-chasing corporates would mean that property prices in this particular sector would be highly competitive – possibly resulting either in more competitive rents on ‘build to rent’ estates or in a higher specification of facilities.

The idea has been floated after research by Grainger, the country’s largest listed residential landlord, highlighted the huge shift in public opinion over home ownership versus renting.

Grainger chief executive Andrew Cunningham says build to rent will be the ‘next big thing’.

More than two-thirds (67%) of those questioned by Grainger believe long-term renting will become increasingly common in this country, as it is on the continent. Over half (54%) believe that in 15 years’ time, more people will rent than own their homes.

Grainger itself predicts that the average age of the first-time buyer will be in the early 40s, putting increased pressure on the private rented sector.

‘Build to rent’ schemes would almost certainly be aimed at younger professionals and possibly retirees stepping away from home ownership, and incorporate social and sporting facilities such as pools and gyms.

Another possibility would be that landlords like Grainger build on land offered by local authorities, rent out the homes at affordable rents, and at the end of an agreed period, sell the property on.

Currently, 90% of landlords in the private rented sector – which houses 3.6m households – are private individuals, but with demand for accommodation continuing to rise, there has been increasing pressure for bringing corporates into the sector.

The Government is taking the issue seriously, looking at how to encourage Real Estate Investment Trusts (REITs) in the residential sector.

The Communities and Local Government department has also this week launched a new consultation reviewing the barriers to institutional investment in private rented housing. Led by Sir Adrian Montague, it is due to report in June.

Richard Gordon of UKPI said: “We are already running this type of scheme in that the developers we are working with, build specifically with the buy-to-let market in mind, and select properties in locations that are ideal for letting.

“This proposal is an interesting one and has potential and I see this as a natural progression with the projected shift from home ownership to renting. But if this is to be rolled out as an ‘official’ scheme, the government must not exclude the private individual investor and make it exclusive only to companies and institutions.

“What we don’t want is to create large ‘ghetto’ estates owned by faceless institutions. Private individual Landlords needs to have to opportunity to invest in this way and it will need to include smaller individual blocks not just large estates.”

This is resulting in extraordinary levels of competition between buyers for the limited property for sale, while demand remains close to record high levels.

Particular hotspots, such as Chelsea and South Kensington, have seen such strong demand from buyers that deals are being agreed within hours of a property coming onto the market, often after just one viewing.

Furthermore, homebuyers, frustrated by a lack of options, are agreeing to pay a premium above the asking price in order to secure a home on a specific road. Two flats Cluttons recently sold on South Kensington’s Onslow Square went to sealed bids, resulting in deals being agreed in excess of £100,000 above the asking price. This demonstrates the underlying confidence in the London market, reflecting buyer belief that values will continue to appreciate.

Charlie Noel-Buxton, Partner for Residential Sales, said: “House hunters in Prime Central London, starved of options, are going to great lengths to secure a property when it comes onto the market, particularly those on the most desirable roads.

“We believe registered demand underestimates the underlying level, with new instructions attracting a rush of applicants who aren’t registering with agents until they see a property they like. It’s a seller’s market, and those who need to sell this year can expect to benefit from a lack of competition from other sellers, combined with near record levels of buyer interest.”

Richard Gordon of UKPI commented: “The London market is often seen as being disconnected to the rest of the country. However, what happens in London generally happens elsewhere soon afterwards. Where London lead’s – other areas follow. This is true in both falling as well as rising markets.

“It is very clear there is huge demand for London property at present and this will start to filter out to other areas over the coming months, if it hasn’t already. I firmly believe the UK property market has turned a corner, particularly in the good quality, affluent areas where demand is high and buyers have the financial ability to pay the prices being asked.”

The same survey also established that on average 23.3% of an intermediaries’ business was now buy-to-let, compared to 19.3% a year ago.

The Financial Adviser Confidence Tracking survey (FACT) asked intermediaries what the most popular reason for landlords obtaining a buy-to-let mortgage was in Q4. Intermediaries said that four out of 10 landlords were taking out buy-to-let mortgages in order to expand an existing property portfolio, whilst a third of landlords were taking advantage of greater competition in the sector to remortgage. On average intermediaries saw an increase in their buy-to-let business of 4.5% in Q4.

Most strikingly perhaps those surveyed also reported an increase in first-time landlords applying for their first buy-to-let mortgage, rising from 19% in Q3 to 23% in Q4. This continues the improving trend that has been recorded with the proportion of first-time landlord business now more than double the levels at the peak of the financial crisis.

When asked for their views on what the likely availability of buy-to-let finance would be in the first quarter of 2012, half of intermediaries said that they thought availability would improve and 41% said it would remain the same.

John Heron, Managing Director of Paragon Mortgages, said: “The final quarter of 2011 was for many intermediaries a successful one, with increased optimism about the coming months and a steady improvement in the level of buy-to-let business being written. With record levels of rental demand being reported it is good to see that existing landlords are increasing the size of their portfolios but it is particularly notable that the proportion of new landlords is also increasing.”

“If these trends are maintained through early 2012 it would seem that the broad expectation of a further expansion of the buy-to-let market in 2012 is well founded.”

However, this February’s 4.1% (£9,192) increase is the highest monthly rise Rightmove has recorded since April 2002, a surprisingly strong uplift given the challenging economic environment.

In part this is fuelled by the cash-rich sectors of the market where buyer demand is exceeding suitable property supply, though there is also evidence of increasing housing market confidence. After four years of constant economic uncertainty, it seems some property consumers have accepted current market conditions as the new norm.

Miles Shipside, director at Rightmove comments: “We’re seeing a strong ‘spring bounce’ in asking prices this year, but the ball is still a lot smaller than it was before the credit crunch as market volumes are constrained. The biggest jump in new sellers’ asking prices for nearly ten years indicates there is pricing power if you are selling the right type of property in the right place where enough potential buyers have access to funding. If your local market does not have those characteristics and your price-pump is based on little more than seasonal optimism and an estate agent’s hot air, then be prepared for buyer response to be a let-down.

“However, there are also indications that those who are able to buy but had previously lacked the confidence to take the plunge are of a more positive mindset this year. Perhaps some people are adjusting to the realities, opportunities and strange normality of a low volume but apparently stable property market”.

Record January search activity on Rightmove indicates a pent-up desire to move that out-weighs the uncertain economic outlook. With sales transaction numbers having been depressed for the last four years, many households will have a pressing need to move, and some of those that are able to do so seem to be springing back to life.

Shipside comments: “Search activity on Rightmove is up by 19% on January 2011, and it could be a sign that some of those who can afford to move have decided to get on with their lives, driven either by desperation or by coming to terms with the constant barrage of negative economic news being the new norm. You can get tired of gloomy news, or get used to it, and indeed for some cash-rich buyers life has moved on to such an extent that it’s like the Lehman Brothers collapse never happened”.

The range of two, three and five-year fixed rate buy-to-let products also aims to give buyers greater flexibility around fee choices.

They include a two-year Fixed Rate to 70% LTV, with an interest rate of 3.89% (was 4.09%) fixed until 30 April 2014, an application fee of £245 and completion fee of £2,250. It has an early repayment charge of 4% of capital repaid and interest to the end of the month.

The two-year Fixed Rate to 70% LTV (low fee option) has an interest rate of 4.29% (was 4.39%) fixed until 30 April 2014, an application fee of £245 and a completion fee of £750 (was £995). It has an early repayment charge 4% of capital repaid plus interest to the end of the month.

The three-year Fixed Rate to 70% LTV has an interest rate of: 4.29% (new to range) fixed until 30 April 2015, an application fee of £245, completion fee of £1050 and an early repayment charge of 4% of capital repaid plus interest to the end of the month.

The five-year Fixed Rate to 70% LTV has an interest rate of 4.59% (new to range) fixed until 30 April 2017, an application fee of £245, completion fee of £2,250 and an early repayment charge of  5, 4, 3% of capital repaid plus interest to the end of the month.

The five-year Fixed Rate to 70% (percentage fee option) has an interest rate of 4.89% (no change) fixed until 30 April 2017, no application fee, and a completion fee of 2%.

All these products revert to Bank Base Rate plus 4.45% (currently 4.95%), carry an over payments of up to 10% per annum without penalty and free legals and valuations available for remortgages.

These new products are available through the Society’s Skipton Direct customer service centre, branches and all intermediaries.

Kris Brewster, Skipton’s head of products said: ”We recognise that landlords play a vital role in bringing competition and vitality to the struggling mortgage market as well as providing private letting options for the first time buyers of the future. That’s why we’ve worked hard to cater for their needs with a competitive and varied range of product options since re-entering this market a year ago.

“We’re constantly listening to customer feedback and these latest products reflect some of the features they’ve said they want, including a choice of fee arrangements as well as even more competitive rates.

“We’re also giving people more flexibility around their choice of product term with the same rate applicable to the two and three-year products, in return for a slightly higher fee for the longer term option.”

Commenting on the data, Steven Lees, Director of SmartNewHomes, said: “Unwavering buyer demand in the run-up to Christmas and more readily available finance, particularly for first time buyers, meant that the new homes market recorded a robust level of growth last year, reversing the trend for annual price falls seen at the end of each calendar year since 2006.

“The new homes market outperformed the wider market in 2011 with our research revealing that homeowners now prefer properties with a contemporary design and which better cater to modern-day needs.

“Although prices have increased, house builders have maintained affordability for buyers by introducing a range of new mortgage products and the industry is currently working with the Government on its new mortgage indemnity product to be unveiled this year.”

The value of the housing stock at the end of 2011 is estimated at £3.9 trillion, up from £2.1 trillion in 2001.

The increase of £1.8 trillion over the decade is equivalent to £68,500 per household – in the owner-occupied and private rented sectors – in the UK. The value of the UK private residential housing stock has grown at more than twice the rate of any increase in overall consumer prices, with the retail price index up by 38% over the past ten years.

However Halifax says the picture changes when looking at the value of housing stock since 2007. Over the past five years the value of the UK’s housing stock has declined by 5%, or £187 billion.

This reflects the reduction in house prices since autumn 2007: a decline Halifax says is more than compensated for by the significant increases in the half decade prior to 2007.

All 12 regions of the UK have seen a significant increase in the value of their private housing stock during the last ten years.

“The decline in house prices seen since autumn 2007 notwithstanding, the value of UK’s housing stock has soared in the decade to 2011, rising by 84% to just under £4 trillion at the end of 2011.” said Martin Ellis, housing economist at Halifax.

“Whilst outstanding mortgage debt has more than doubled over the last ten years, the value of the housing stock has risen by more in monetary terms.

“As a result, the total value of housing equity has shown a healthy increase. For most homeowners housing is still very much the main store of private wealth.”

During the fourth quarter of 2011, a total of 34,800 buy-to-let mortgages (of which 15,600 were remortgages) were advanced, with a total value of £4 billion. This was virtually identical to the volume of business in the third quarter (34,300 loans worth £4 billion) but up on the fourth quarter of 2010 (26,300 loans worth £2.9 billion).

In addition, investor demand for bonds backed by buy-to-let mortgages surged last week by the most in almost two years, according to JPMorgan Chase & Co.

While Britain’s economy may slide into recession in the first quarter and unemployment is at a 16-year high, buy-to-let mortgages are gaining ground as tighter lending conditions keep first-time buyers renting.

Buy-to-let mortgages account for nearly 13% of the total outstanding value of mortgages in the UK, and buy-to-let lending represented nearly 11% of total gross mortgage lending in the fourth quarter of 2011.

“the rationale for buy-to-let remains strong.”

Commenting on the latest data, CML director general Paul Smee said: “Buy-to-let lending continues to perform well. Demand for rented property remains high, so the rationale for buy-to-let remains strong, and there is little reason to foresee any change to this positive outlook for the sector.

“These figures do not suggest that buy-to-let is crowding out first-time buyers; more that it is performing a really important role within the overall housing market. The benefits of the availability of good quality, private rented housing should not be overlooked, especially as there are many households which need the flexibility and mobility that the private rented sector is well placed to provide.”

Low interest rates and rising rents are encouraging investors to put savings into the properties, and falling late payments and lower repossessions have lured back lenders including Yorkshire Building Society and Banco Santander SA that exited the market during the slump.

“It’s the only growth story in the broader market at the moment,” said Jeremy Law, head of buy-to-let lending at Yorkshire Building Society.

22 per cent returns

Gross buy-to-let income returns rose to 5.2 percent last year from 5 percent in 2010 as rents increased, broker LSL Property Services Plc said. That figure excludes debt, the impact of vacancies, late rent payments and property management costs.

An investor with a standard buy-to-let mortgage would get a net pre-tax annual return by 2017 of almost 22 percent, if current conditions prevail and home prices appreciate at the average rate of the past two decades, the Association of Residential Letting Agents projected.

About 25 lenders are offering Buy-to-let mortgages compared with 19 a year ago.

Buy-to-let returns are on the up – and new landlords are piling into the sector.

According to UK agents Knight Frank, the average annual yield nationally was 5.4% last year – compared with a FTSE All-Share index yield of 3.8%.

In separate research, property portal FindaProperty says that rental yields in Greenwich, London, are up to 10.2% and in parts of East London are 9.4%.

Meanwhile, buy-to-let mortgage specialist Paragon says that almost one in four buy-to-let loans went to first-time landlords in the last quarter of last year – the highest level since 2006.

Richard Gordon of UKPIS said: “There is no doubt that buy-to-let is firmly back on the investment agenda. There is renewed interest from those who see the property market as a safer environment than other asset classes such as shares or even leaving money on deposit in the bank.

“There is a noticeably more positive vibe around since the turn of the year. I sense that people have had enough sitting around and doing nothing, waiting for financial Armageddon. Despite all the doom and gloom prophecies, people have decided it is time to get out there and get on with their lives and they feel confident investing in property.”

29% of Britons forecast that house prices across the UK will increase over the next twelve months, more than the 22% that predict a price decline over the same period.  As a consequence, the headline House Price Outlook balance has moved into positive territory with an overall balance score of +7 percentage points (29% minus 22%).

This represents a marked improvement compared with the negative reading of -2 (28% expecting a rise minus 30% expecting a fall) recorded in October’s survey.

However, the outlook for the housing market remains subdued. The majority think that any house price movement over the next twelve months will be relatively small with around two-thirds (65%) expecting any movement to be between +5% and -5%.

Eight of the eleven UK regions tracked recorded a positive headline House Price Outlook balance (i.e. indicating that more people expect house prices to rise rather than fall). This contrasts sharply with October’s tracker when just three regions had a positive headline balance.

Londoners have the most optimistic outlook for the housing market with an overall net balance of +21, followed by the East Midlands (+18) and Yorkshire and Humber (+14). At the other end of the spectrum, the North East has the most negative outlook for house prices (-3).

Martin Ellis, housing economist at Halifax, commented: “The modest improvement in consumer confidence in the outlook for house prices reflects the resilience of the UK housing market over recent months in the face of a weak economic recovery and the deterioration in the outlook for both the UK and global economies.

“Looking forward, we currently expect broad stability in house prices in 2012, although there remains much ambiguity around this given the considerable uncertainty regarding the prospects for the UK economy.”