Property investors saw a return to easier access to funds in the first quarter of 2011 after a slow 2010, driven partly by the return of specialist lender Paragon offering access to specialist buy to let products such as HMO Mortgages and Limited Company Finance. Combined with tough conditions for First Time Buyers this has driven property into the hands of landlords and more tenants than ever into rented accommodation.
Shifting demographics within the UK also play into landlords hands. More and more people are choosing to live in single person households at the same time as shortages of jobs in poorer parts of the EU is leading to more immigration and a need for short term accommodation for those workers. Landlords are looking to take advantage of this shift by investing in and developing suitable units for let in these areas. The combination of higher immigration, more single person households and increased availability of funds to landlords seeking to meet that demand is pushing up prices in many parts of the country and making the situation more challenging for first time buyers.
Many studies show that first time buyers often save for between six and ten years to buy their first home with the average age of a first time buyer currently on an upward trend in most surveys. This generally means a longer spell in rented accommodation than would have been the norm in the past. I don’t need to explain how this leads to better demand for properties to rent and better performing portfolios of buy to let properties and easier to access buy to let mortgages.
Some government initiatives appear to be aimed at curbing the growth in property prices and easing demand by getting first time buyers on the ladder. However, due to the credit crises faced by most Western Governments the availability of funds for these projects is limited to say the least. As a result the easing of demand is likely to be insufficient to actually stem the increases in private rental yields we are currently seeing. I would expect improving credit conditions, availability of loans and new incentives to encourage professional property investment to have more impact on pushing prices up and providing more supply through rented properties than through purchased first time buyer homes.
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