by Mark Johnston
With rents on the rise, buy to let landlords are leaper the benefits of the lack of first time buyer mortgages. Some private landlords are seeing their properties raise up to 6% yields do to the lack of mortgages in the system.
A report by a leading property website has highlighted how some landlords are making a killing on long suffering first time buyers who are trapped by the lack of mortgages and forced into renting within the private market. The report claims that the lack of rental properties and increased number of would be first time buyers looking to rent, prices are increasing by up to 10%.
It may come as a surprise to many in the United Kingdom but it is now cheaper to purchase a home than to rent one. New research has highlighted that in as many as 80%n of towns and cities across the UK, the cost of owning a house has dropped below the cost of renting one. This may come as good new to first time buyers but many will already realise that it makes little difference if they cannot secure a mortgage.
The director of the property website said: “More than 40 per cent of people in rented accommodation in our survey reported their fears of another upwards movement in rents. They are at the sharp end of competitive demand from other renters, experiencing a struggle to find suitable rental accommodation and losing out on properties to higher bidders.
He added:“Rental agents are reporting turning many prospective tenants away, with only those with the best references passing the beauty parade to get to view the limited new stock on offer. The upwards price pressure on rents is highlighted by that fact that the stock of available rental properties advertised on the Rightmove website is 23 per cent down year-on-year. The momentum for further rises continues, even though some agents are reporting increases of 5 per cent to 10 per cent in the last year already. Those would-be buyers who have been trapped in rented accommodation because they would like to buy but cannot afford to remain in the majority, with some 55 per cent stating this frustration.”
Managing director of Curzon Investment Property, James Moss said: “The main reason we’re destined to stay a nation of renters is that Government promises to unlock the mortgage market and build more homes have been broken. The market is being choked off at both ends and a combination of throttled lending and fractured supply means prices are kept high and people can’t borrow enough. New local planning laws which give Nimbys the right veto much needed development are the nail in the coffin.”
David Newnes, managing director of LSL Property Services, also added: “Rents have been creeping upwards, month in, month out for the last year, and now stand just a few pounds shy of £700 per month. Constrained mortgage finance is choking off the number of first-timers able to get on the ladder, and would-be landlords’ ability to buy investment properties. With rising demand outpacing the increase in supply, rents can only go one way.”
Mr Moss finished by saying: “The trend in prime areas centres very much around rich foreign investors coming to the UK to take advantage of low rates and a weakened Sterling. We’re seeing massive demand from cash-rich Chinese and Russian investors, and those who’ve got their money out of Greece. These guys see trendy London homes as trophy assets and will pay whatever they need in order to get them, pushing the prices and the rents up for everyone here.”
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