Property: BTL deals first time buyers another blow – 3343

16th February 2011

Well buy to let is back, according to the Guardian, it has reported that those who can't yet afford to buy are facing an average annual rent rise of 8%.

The rise has been predicted by the estate agent Savills. It is claiming that in London renters will pay 8% more across the most desirable London locations and 7% in the most sought-after central zones.

Tenants outside the capital will also see rises, it reports.

"Stock shortages persist, which is good news for landlords," says Jacqui Daly, director of Savills residential research.

But rent rises may not be sustainable long term, the Guardian adds that the Association of Residential Letting Agents has admitted that 40% of its members reported an increase in tenants struggling to meet payments last month.

The re-emergence of BTL lending would appear to be at the expense of first time buyers, Kensington and Paragon have this month launched buy to let mortages.

Citywire's Lourna Bourke fears for first time buyers.

She writes that lenders are helping buy-to-let investors return to the market with 85% loans now available for the first time since the credit crunch hit.

 Kensington Mortgages has just launched a new 85% loan to value mortgage.

On FTAdviser.com Julia Bradshaw writes that Paragon has added seven products to its BTL range.

To be fair Bourke points out that it's not all easy for landlords, the choice is still limited.  Kensington's 85% product for example, is a two year fix at 5.99% – but with a hefty fee of 2.5% of the loan. 

This is not cheap – although rental cover has been relaxed from 125% of mortgage interest to 120%.  Borrowers do however have the option of paying the percentage fee, or a higher interest charge and a flat fee. .

But increasing demand for private rental property is being fuelled by the fact many young people cannot afford to get on the property ladder, in London for example many have long been priced out by BTL landlords.

In her blog, Melanie Bien, of Private Finance says there are still options for first time buyers.

But on Citywire blogger Colin Cloy is not convinced enough is being done and calls for restriction on BTL landlords.

He blogs: "FTBs can no longer compete with BTL landlords without parental support as an average deposit is required of approximately one years income.

BTL landlords as well as property owners on the other hand have benefited from the rapid house price inflation over the last decade due to easy credit.and are in a much stronger position than FTBs to purchase. I understand that this is not just the case in England & Wales but also in Scotland where the legal system differs.

On the money section of the Daily Mail website many readers express their anger what they consider one of the main causes of the current first-time buyer property criris.

Habler writes:  "Buy to let landlords are mainly parasites who thumb their noses up at people who actually create something or do a days work.

A responsible government would put an end to this freeloading on cheap mortgages which penalise people who actually save money (real money they worked and saved for). If your all such financial wizards , property 'developers' , magnates etc why don't you start a real business that employs people, instead of robbing them with extortionate rents to fund your next deposit.

"I'd rather sign on than pay you half my income and live like a serf."

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