The Power Hour
MBE 2012: Landlords versus first-time buyers
It’s an argument that rears its head time and again: vociferous claims denying landlords are making it harder for first-time buyers to get on the housing ladder. Our panel of experts has another look
DO FIRST-TIME BUYERS AND BUY-TO-LET INVESTORS COMPETE FOR THE SAME PROPERTIES?
John Wriglesworth: No. Brian Hall: Yes. Peter Williams: In some markets they clearly do compete but it’s not universally true. JW: Let’s take students as an example – clearly investors buy properties specifically to offer accommodation for students usually with five or six bedrooms. That isn’t a typical first-time buyer home. BH: I think there is a traditional buy- to-let market that includes student accommodation and houses in multiple occupation but I believe we’re seeing a buy-to-let boom now with more and more investors coming into the market. More people are needing to rent privately for longer and they are living in the types of property that first-time buyers would traditionally have bought and lived in. Phil Rickards: We did some research among our own landlords and around 60% of them have terraced housing or
apartments which naturally falls into first- time buyer category, compared to around 18% with detached stock and 10% with bungalows. Throw into that the fact that more than 50% of landlords tell us they’re letting property to young professionals it’s not scientific to see some cross over. Rob Thomas: It’s very hard to generalise about the buy-to-let market because it is really a series of niches. Typically in London a lot of people renting are saving for a deposit. I myself am a landlord and I’ve had tenants who are investment bankers saving for years before they buy their own property.
IS FIRST-TIME BUYER
COMPETITION ONLY AN ISSUE IN LONDON WHERE THERE IS A RESTRICTED SUPPLY OF PROPERTY AND HOUSE PRICES PUSH HOMEOWNERSHIP INTO LATER LIFE?
PW: First-time buyers in London are more excluded than they are in some other places. It is more a case of access to mortgages than property though. Clearly first-time buyers can’t access finance in a way that landlords can. Buy-to-let investors for example still have access to interest-only deals which first- time buyers don’t. RT: Landlords also have the option of raising finance through accumulated equity which isn’t on offer to first-time buyers either. BH: The Council of Mortgage Lenders reported 18% growth in the buy-to-let market last year and it’s doubled in size over the past five years. That’s a lot of growth. I suspect that there is a traditional buy-to-let market and then a new marketplace emerging that is driving that growth rate. The other thing
34 MORTGAGE INTRODUCER OCTOBER 2012
www.mortgageintroducer.com
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