There is a common misconception that a surge in buy-to-let business has meant first-time buyers are being priced out of the housing market, according to Paragon Mortgages.
Moray Hulme, Paragon’s head of sales, told delegates at the Buy to Let Market Forum 2015 on Thursday that while buy-to-let business had significantly boosted growth in the private rented sector, it was a “myth” that buy-to-let landlords were outcompeting first-time buyers for mortgages.
“We’ve seen a major step change in recent years and more people are gravitating towards the private rented sector, which is not simply through need. A key step in the growth of the private rented sector has been the success of the buy-to-let market,” he said.
Hulme said that there was unlikely to be any slowdown in the strong tenant demand seen in the private rented sector as first-time buyers face tougher affordability checks following implementation of the Mortgage Market Review (MMR).
“The pressure on first-time buyers to save for higher deposits and more stringent checks post-MMR means most people from this part of the market are moving to the private rented sector.
“I think it’s a common myth that landlords out-compete first-time buyers for mortgages. In 2014, first-time buyer mortgages outnumbered buy-to-let mortgages by three to one. We’re also seeing an increase in the number of families that are moving into the private rented sector.”
While Hulme pointed out the strength of the sector, he noted that there were still crucial changes that needed to be addressed in order to sustain the industry’s growth.
“Following the financial crisis, we believe the market has recovered and has gained some momentum back, and now leaves us with the private rented sector being the second largest tenure in the UK.
“However, it’s important to note that the buy-to-let market can only supply so much growth in the buy-to-let sector and there are some fundamental changes that need to be addressed. Firstly we need increased housing, we need to see a government housing agenda that’s fit for purpose, we need to see an increase in landlord investment and we need to see further innovation from landlords,” he concluded.
