When it comes to property investment, there may be much to be said for renting out to key workers. This group, which includes the police, teachers, nurses and firefighters, is present in every town the length and breadth of Britain. Given the important roles they play, each community needs them. Yet they in turn need housing.
For investors in rental property, two good reasons may be given for looking to take on such people as tenants. The first of these is that key workers tend to have safe jobs, an important consideration for many in a recession. After all, whatever the travails the economy is facing now and in the next few months, there is no prospect of shutting all our schools and hospitals down.
Another reason is that for most of this group, buying a property has been a difficult challenge in recent years. This is a situation that has been tracked by Halifax, with the latest results just published.
Back in the third quarter of 2007, the picture appeared very gloomy. House prices were at their peak, the credit crunch was in its early days and in only three per cent of the 493 post towns studied (including the 32 London boroughs) was the average house price considered affordable - defined as a price to income ratio of no more than four to one - to someone with a key worker salary.
For those looking to let out property, therefore, key workers were a significant group of potential or actual tenants.
The latest Halifax figures have revealed a notable change in the situation. While incomes continue to rise, house prices have plunged, so that in the first quarter of this year 21 per cent of towns offered affordable average home prices. This, of course, still leaves a clear majority where prices are out of reach.
However, it is notable that this creates an uneven situation, with some professions doing better than others and the same applying to different regions.
Commenting on this, Halifax housing economist Martin Ellis stated: "Police officers and teachers have seen the biggest improvements in the number of towns where housing is affordable. Another striking feature is that all of the affordable towns are outside southern England, which means that key public sector workers are still heavily constrained in the housing market in the south."
The second of these facts could be of great significance for investors, who may wish to concentrate on southern England, for here they will find more key workers still needing to rent as the first step on the housing ladder remains unattainable.
Even the improvement seen outside the south may not last for long. Mortgage broker John Charcol has predicted that the days of house price decline are numbered. Technical director Ray Boulger said: "What we will see over the next months is the rate of decline in house prices will slow down and stabilisation in the third quarter." He suggested that this process is already being seen in London.
So while investors keen on getting key workers in as tenants may wish to concentrate on the south for now, it could be that the situation will offer them more opportunities elsewhere in the country a few months from now.
Written by Christopher Evans
Published on: May 27, 2009