First time buyers are on the up but buy-to-let down

UK Finance, a lobby group for the financial services industry, has revealed its latest stats show the number of first time buyers rose in May while the number taking on new buy-to-let mortgages fell.

UK Finance see this as a sign government policies and tax changes are rebalancing the housing market.

32,200 new mortgages were completed for first-time buyers over the month, 8.1% more than in May last year and new lending was up 12.5%.

Over the same period, the number of new buy-to-let mortgages fell by 9.8% compared with a year earlier to 5,500. Lending was £700m, 22% lower than in the same month last year.

Jackie Bennett, the director of mortgages at UK Finance, said:

“The mortgage market is seeing a pre-summer boost, driven by a rise in the number of first-time buyers and strong re-mortgaging activity.

“Meanwhile, purchases in the buy to let continue to be constrained by recent regulatory and tax changes, the full impact of which have yet to be fully felt.”

The stats suggest changes to stamp duty introduced by the government in April 2016 are cooling on the buy-to-let market.

Despite the rise in first-time buyers in May, Bennett says some are still struggling to get on the property ladder:

“Affordability remains a challenge for some prospective buyers and this is reflected by a gradual increase in loan to income multiples.”

The number of people moving home was also up in May, with 31,100 new home-mover mortgages completed, up 4.4% compared with a year earlier.

Jonathan Samuels, the chief executive of the property lender Octane Capital, said the stats were a “perfect snapshot” of the changes to the UK housing market in recent years.

“First-time buyers are in the ascendancy while amateur landlords are beating a fast retreat. – what activity there is within buy-to-let is primarily the remortgaging of existing portfolios or properties in order to maintain some kind of margin.

“While professional landlords and institutional investors remain active, amateur landlords are fast becoming an anachronism.”

The Residential Landlords Association’s research wing, PEARL, fears a net loss of 133,000 homes for private rent over the next year – and wants government to scrap the stamp duty surcharge rethink on lettings taxation can avoid it.

This research references the government’s own figures as showing a loss of 46,000 private rented properties in England alone between March 2016 and March 2107.

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