John Heron is managing direcor of Paragon Mortgages
Figures from the Council of Mortgage Lenders show the private rented sector and buy-to-let lending continue to see strong growth. This is being driven by long-term and deep-seated changes in housing patterns in the UK, including a notable shift towards private renting with a corres-ponding reduction in the scale of social renting and owner-occupation.
The owner-occupier sector still dominates and is in no danger of being supplanted by buy-to-let, but the social, economic and demographic changes driving buy-to-let are powerful and likely to ensure growth for many years.
Chief among the factors responsible for these changes are immigration, the breakdown of the family unit, the growing student population and the undersupply of homes. Nowhere is the change more clear than among housing decisions made by young people who are choosing to rent, not simply because homes are expensive but also because it gives them access to flexible and affordable accommodation in a way that ownership does not.
Buy-to-let landlords are responding to an increase in demand from people who would rather rent than buy. Of course, affordability has an impact on this but it is far from the only or most critical issue.
Landlords are a component of the housing market but the proportion of rented properties has not increased at a pace that suggests buy-to-let is an overwhelming driver of house price inflation.
That accolade must go the growing gap between supply and demand. We are not building enough – or the right type of – homes this country needs. Despite endless government reports, nothing much has been done and buy-to-let is one of the few solutions to housing the population that involves more than talking about the problem.
Mike Fitzgerald is sales director of Brentchase Financial Services
Not a week goes by without an article appearing in the national press blaming greedy buy-to-let speculators for stopping first-time buyers getting on the housing ladder.
This may be true and in many towns we have seen crazy prices being paid by landlords for properties that would have been ideal for first-time buyers.
But the question of whether the booming buy-to-let market is to blame for pricing first-time buyers out of the market isn’t as clear cut as it seems.
Many inexperienced landlords have jumped into the rental market thinking they can buy a property for a few years and let the rent cover the mortgage costs before selling for a large profit. This does not always happen and we are seeing a large number of repossessions. In fact, at a recent property auction in London over 50% of the repossessed properties for sale were buy-to-lets.
This trend may deter some prospective landlords from buying and this will help first-time buyers get a foot on the property ladder.
But we must realise that not everyone wants to buy a property and have the commitment of a mortgage, so a strong rental sector is necessary. In many European countries, renting is still considered preferable to buying.
Rather than blaming the buy-to-let sector the government should consult with the lending industry on how the alleviate the plight of first-time buyers. It has never been easy for people to get on the housing ladder and it will take a concerted effort by the government and other players to change things.
Trying to lay the blame on one sector of the housing market is not the way forward. Raising Stamp Duty thresholds and perhaps even looking again at some form of tax relief for first-time buyers may be a better option.