New research from Comparethemarket.com suggests that the rapid growth of the buy-to-let market has come at the expense of first-time buyers.
Comparethemarket.com said that the proportion of buy-to-let enquiries grew by 4.4% in 2015 to 18.2%, compared to a fall in first-time buyers’ interest of 3.7% to 23.5%.
There were no signs of a reducing market in January with year-on-year growth of 16% and 62% compared to December.
Jody Baker, head of money for comparethemarket.com, said: “The buy-to-let market has been subject to both extensive discussion and criticism over the past year with even the Bank of England’s Financial Policy Committee labelling it a risk to the UK’s financial stability.
“This data only reinforces the view that over the past year, families and others looking to get a foot on the housing ladder are being priced out by landlords. It was great to see the government take action in the Autumn Statement but time will tell as to what the material impact will be on the market after 1 April.”
However, with the new stamp duty on buy-to-let purchases there is little expectation that the number of enquiries for buy-to-let mortgages will outstrip the number for first-time buyer enquiries, Comparethemarket.com said.
Stamp duty will rise by 3% for landlords and second home owners from 1 April as part of the government’s efforts to dampen the buy-to-let market and free up property for first-time buyers. The basic rate of tax relief landlords can claim on properties is also set to fall to 20% from April 2017.
Surveyors have reported a surge in buy-to-let investors looking to beat the April stamp duty deadline. The Royal Institute of Chartered Surveyors said in its monthly report that buyer enquiries rose for the tenth successive month in January, with the near-term pressure on prices intensifying.
Speaking at the Paragon Great Buy-to-Let Debate in London last week, John Heron, managing director of Paragon Mortgages, said that despite a likely decline in buy-to-let after April it was unlikely that market will go backwards.
“Last year buy-to-let represented less than 10% of house mortgage purchases. Buy-to-let purchasers were outnumbered by first-time buyers by three to one. That said, the environment that surrounds buy-to-let has clearly turned more negative. We have seen this with stamp duty and taxation of rents,” said Heron.
“It is clear that landlords are less confident and that will lead to a slower rate of growth going forward. But I think it is unlikely we will see the market going backwards, even in adverse economic conditions,” he added.
