Buy-to-let investments surge as first-time buyers squeezed out

By: Veselin Valchev
Veselin Valchev
Veselin is a data scientist with extensive experience in commodities and natural resources within the FTSE 100. His data… read more.
on Sep 29, 2015
Updated: Apr 9, 2020

Buy-to-let mortgage brokers have enjoyed growing market activity since July this year, despite government plans to cut tax breaks for landlords to provide for a “level the playing field” between buy-to-let borrowers and first-time buyers, The Times reported today., a popular price comparison website, said that demand for buy-to-let loans is up more than 50 percent on a year ago.
“A key factor in the remarkable year-on-year increase in buy-to-let enquiries we have seen is the wave of pension money suddenly available,” Jody Baker, of, said as quoted by The Times. “Buy-to-let is becoming an attractive and recognised investment for those looking to generate income in retirement.”

Earlier this month, a report by the Nottingham Building Society found that 19 percent of UK landlords are planning to invest in more properties amid the bull market.
Furthermore, four percent of homeowners plan to become landlords for the first time over the next year.
According to Nottingham’s research, 70 percent of mortgage brokers believe the new pension freedoms enacted this April will fuel demand for buy-to-let mortgages. 26 percent of the brokers forecast that demand for mortgages will rise dramatically over the coming 12 months; 41 percent predicted a slight increase, while only two percent foresaw a decline.
On the other hand, first-time buyers are finding it increasingly difficult to compete with demand from higher up the ladder.
“First time buyers are finding themselves being squeezed out of the competition, which of course means it’s taking young buyers longer to get their foot on the first step of the ladder, which will in turn increase pressure on the rental market,” said Mark Hayward, managing director of the National Association of Estate Agents (NAEA).
The NAEA said last week that an average of 11 potential buyers are bidding for each available residential property, “which isn’t sustainable”. The Association warned that the UK housing market is “reaching crisis point”.
Meanwhile, House prices across England and Wales have grown by 0.5 percent in the month of August, and 4.2 percent year-on-year, which is the slowest pace of growth since November 2013, a report from the Land Registry revealed yesterday.
Although price growth slowed, the chronic shortage of housing in the UK is still in command of the market, analysts argued.
“This month’s figures might show that price growth has slowed, but the fundamentals are such that growth is inevitable over the long-term,” said John Eastgate, sales and marketing director of OneSavings Bank.
“Ultimately, the supply and demand imbalance will sustain property values. The UK is still desperately short of new housing, yet a combination of historically low mortgage rates and improving access to mortgage finance is sustaining demand.”

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