Home ownership has increased but at what cost to the overall market?
If we were ever in doubt about how government policy and intervention can fundamentally change markets, we must only look at the impact of the state on the UK’s first-time buyer and buy-to-let sectors.
The most recent figures from UK Finance show first-time buyers at their highest number since 2006, up 7.4 per cent on 2016 and reaching 365,000 during 2017. Conversely, December’s buy-to-let activity saw just £2.4bn of lending during the month – down a significant 11.1 per cent on December 2016.
Even the most optimistic proponent of buy-to-let activity might struggle to suggest the influence of the 3 per cent stamp duty charges and changes to mortgage interest tax relief has been minimal.
The previous government’s objective of moving property from the rental sector into home ownership can probably be judged to be a success. But at what price?
The first-time buyer is important but it is not the be-all and end-all of the market. Indeed, purchase activity – particularly in buy-to-let but also elsewhere – has been impacted considerably.
What the Government may not be so aware of is the overall impact it has had on the second hand property market, which now appears to be lagging some way behind new-build.At some point, there will need to be a stocktake in terms of maintaining the anti-buy-to-let measures.
The importance of the private rental sector in the UK cannot be underestimated, particularly when we look at house prices, deposit requirements, mortgage affordability and the like. We can ill afford a further drop in private rental supply over a longer time-frame.
First-timers are the lifeblood of the market and we, of course, are fully supportive of greater levels of higher LTV lending to support them. But there needs to be a measured response that supports the entire market, not just one small part of it.
I am not so sure we have that and, as time goes by, the impact could be far more damaging than the Government may ever have thought possible.
Pad Bamford is business development director of AmTrust Mortgage & Credit