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Buy-to-let chokes out first-time buyers

The rapid growth of the buy-to-let market during 2015 has come at the expense of first-time buyers, new research shows.

Buy-to-let grew 4.4% to make up 18.2% of all mortgage enquiries in 2015 while first-time buyer enquiries fell 3.7% to 23.5%, according to new research from Comparethemarket.com.

Total mortgage enquiries increased by 8% in the year to January.


Head of money Jody Baker said Government initiatives to encourage home ownership have failed to overcome challenge of growing buy-to-let market.

"Buy-to-let has gained a chokehold over first-time buyers as many struggle to get out of rented accommodation and on to the housing ladder."

Baker added: “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.”

On current trends, the number of enquiries for buy-to-let mortgages will soon outstrip first-time buyer enquiries, hitting the Government’s home ownership drive.

Baker said the 3% surcharge on stamp duty for buy-to-let purchases should prevent this and suggested the current buy-to-let market may be unsustainable, with growth of 16% in the year to January and a dramatic 62% leap in enquiries compared to December.

  • Commercial Trust

    I don't understand how enquiry data implies a 'choke-hold' over one area of the market. As for first-time buyers being "priced out", researchers from the Bank of England found last year that this was not the case: http://www.bankofengland.co.uk/research/Documents/workingpapers/2015/swp549.pdf

    The author noted a "statistically significant 1.0% discount associated with BTL transactions, implying that BTL investors spend on average less than other buyers (or, equivalently, other buyers spend more than BTL investors)".

    From an investor who is buying with a view to making a profit, it does not make sense to overbid for a property. Buyers, on the other hand, are less concerned with profit, and are in many cases willing to pay over the odds to buy a home of their own, knowing as they do that prices will only become more unaffordable.


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