First-time buyers have seen prices jump nearly 10% in the last year due to the surge in demand for buy-to-let properties, according to property website Rightmove.
Rightmove said that starter property prices were up 4.9% on last month and 9.6% from a year ago.
The national average price of property coming to market increased 0.6% this month to a new high of £296,549, up 5.6% from last year.
High tenant demand has led to increasing competition between buy-to-let investors and first-time buyers, pushing up prices for smaller properties, Rightmove said.
Many letting agents are also reporting a high number of same-day rentals as there is little or no property to rent.
The property website said the number of first-time-buyer properties coming to market down was down 8% on last year, and advised first-time buyers to try “winning over the hearts, minds and pockets of sellers”.
The buy-to-let market has picked up greatly in recent years. Last week, the Council of Mortgage Lenders said the number of UK buy-to-let loans had surged 37.9% year-on-year from August 2014.
Miles Shipside, director and analyst at Rightmove, said: “A near 10% price surge in this category in the last year proves that despite tighter lending criteria in last year’s Mortgage Market Review, some first-time buyers can still afford the higher prices being asked for by sellers in this sector.
“It’s also symptomatic of a shortage of properties coming to market with two bedrooms or fewer, combined with demand from both first-time buyers and landlords investing in reaction to the huge rental demand for smaller properties.”
Shipside has this advice for first-time buyers:
Win over the heart, mind and pocket of the seller. Buy-to-let investors will give sellers logical reasons for accepting their offer over a first-time-buyer, so do whatever you can to be not only among the first to view, but also to meet or communicate with the owner and make sure they know how much you would love to own, occupy and cherish their property. Most owners have sweated hard to create a home and become very attached to it, so emotionally would prefer to pass on their property legacy to your caring hands rather than those of an absentee landlord.
While the agent will advise on the best and least risky offer to accept, the ultimate decision is the seller’s. You can mitigate the seller’s concerns by getting your financial affairs in good order and ensuring you have an agreement in principle for a mortgage, giving sellers and agents peace of mind in this area. Finally, landlord investors are in business to make a return, so may habitually try lower offers as they’re less emotionally attached to the properties on which they are bidding as it’s not their future home. If you can find out what fair price the seller is ideally looking for, and you can afford it, then your bid for their home may well be better for their pocket than a landlord’s and also give them a feel-good glow for helping you onto the property ladder.
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As a first time buyer I can relate to this after recently being outbidded by a landlord cash buyer even though I had put forward the asking price immediately following my viewing . The estate agent didn’t take instructions on my offer for 2 days until calls were made to other viewers for “feedback”….which miraculous lead to 2 other offers at the asking price! This led to best and final sealed bids. And I lost out to a cash buyer who does not plan to live in the house just rent it….I have even being refused viewings by estate agents because landlords are getting in first and making cash offers quickly. So frustrating for first time buyers!