Landlords overtake first-time buyers as Britain’s most enthusiastic house buyers
Landlords borrowed more to buy houses in the first three months of this year than first-time buyers, the first time this has happened since the financial crisis.
Buy-to-let investors’ (BTL) new purchases accounted for 21pc of all loans in the first quarter, compared with 16.9pc for first-time buyers, according to the Bank of England.
The last time landlords were bigger mortgage borrowers than new buyers was in early 2008, in the depths of the financial crisis.
By value, the figures indicate BTL investors borrowed £13.5bn in the three-month period, while first-time buyers took out £10.8bn of mortgages.
In the same period of 2015, landlords borrowed £7.7bn while new buyers borrowed £8.6bn.
The key driver of accelerating lending to landlords in the period was the stamp duty change in April.
Under the new rules landlords and second-home owners must pay an additional tax, encouraging investors to buy before the end of March.
There was also a sharp drop in the proportion of loans given to borrowers with small deposits, another indicator that the frenzy of activity from landlords made it harder for other buyers in the month.
The proportion of loans worth more than 95pc of the value of the property fell to 0.2pc in the first quarter, from 0.4pc a year earlier.
That is almost the lowest level of such borrowing in the Bank of England’s published records, which date back to 2007.
The surge in BTL borrowing is thought to have come to a dramatic halt following the introduction of the additional tax in April.
However, market-watchers expect the overall trend will still be towards more landlord investors.
“We believe buy-to-let lending volumes will continue to increase in 2016 and the reason for this is twofold. Firstly, it is becoming more difficult for people to buy their own homes because of rising house prices,” said Colin Bell at Hampshire Trust Bank.
“At the same time, there is a changing attitude among 20 to 30 year olds, who are becoming a populous of rent not buy, including movies, cars, clothing as well as property. Therefore buy-to-let landlords will become an increasingly important part of the housing market.”
Meanwhile economist Howard Archer at IHS Global Insight expects prices to rise by 5pc to 6pc this year.
“High employment, decent purchasing power and the probability that interest rates will not rise for some considerable time to come (and highly unlikely in 2016) should underpin house buyer interest,” he said.