Landlords overtake first-time buyers as Britain’s most enthusiastic house buyers

First-time Buyers

For the first time since early-2008 in the midst of the financial crisis, the first quarter of 2016 saw landlords borrowing more money to buy houses than first-time buyers.

Between January and March 2016, new purchases for buy-to-let landlords accounted for 24% of all property loans, while loans for first-time buyers accounted for 19.9% of all property loans, according to figures published by the Bank of England. In terms of figures, BTL landlords borrowed £13.5 billion, while first-time buyers borrowed £10.8 billion. During the same period in 2015, BTL landlords borrowed £7.7 billion (an increase of 75.32%), while first-time buyers borrowed £8.6 billion (a 25.58% increase).

Why the borrowing increase?

It’s likely that the main reason behind this borrowing increase in the first quarter of 2016 is the introduction of the stamp duty change in April. Landlords, or people purchasing a second-property, now have to pay an additional tax on top of the original property price. As such, many landlords rushed to buy properties in March before the tax change was implemented.

At the same time, there was a decrease in the number of loans approved for borrowers with a small deposit, this meant that BTL investors were in a stronger position to make property purchases and take out loans, than first-time buyers who may not have the same starting capital to buy a property. The percentage of loans given which were worth more than 95% of a property’s value fell from 0.4% in the first quarter last year, to just 0.2% in the same period this year. This accounts for loan approval rates for small deposit loans being at one of the lowest levels since the Bank of England began publishing these statistics in 2007.

Buy-to-Let landlords are in a strong position

While many believe that the surge in buy-to-let borrowing will slow from April 2016 onwards, especially in the wake of the stamp duty changes, and the EU referendum, market watchers still suspect that the overall trend of landlords borrowing more compared to first-time buyers will continue.

Colin Bell of Hampshire Trust Bank offers two reasons why he believes that the market is a strong one for buy-to-let landlords. The first being rising house prices are making it more difficult for first-time buyers to get on to the property ladder, and the second being that he believes that there has been a shift in attitude for people between the ages of 20-30 who prefer the low-commitment of renting compared to purchasing. Either way, with landlords purchasing cheaper properties as a result of the new stamp duty tax, it does seem that landlords and investors are in a better position to buy property compared to first-time buyers.

If you’re a first-time buyer looking to purchase a property in Cardiff, or a buy-to-let landlord looking to add a property to your portfolio, as Cardiff’s largest estate and letting agent, we have hundreds of properties available across Cardiff, including Roath, Cathays and Cardiff Bay. For more information, pop into one of our branches, or email us on:

31 August 2016


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