Rising stamp duty, falling mortgage availability and now rising rents. Life doesn’t get any easier for would-be first-time buyers.
The residential lettings survey published by the RICS this morning shows a shift in the balance of supply and demand in the rental market that’s the mirror image of what’s been happening in the sales market. Demand from tenants are rising while new instructions to rent are falling. For the first time in 18 months more surveyors say rents are rising than falling and a healthy balance of surveyors expects them to go higher in the next six months.
The RICS interprets all that as a clear sign that reluctant landlords are returning to the sales market. ‘If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties.’
Figures from the Council of Mortgage Lenders (CML) last week showed that the number of loans to first-time buyers in January was down 54% on December. True, December’s figure was artificially high because buyers were rushing to beat the end of the stamp duty holiday on properties valued at between £125,000 and £175,000, but there are few signs of much recovery in the lending market before the election.
The number of first-time buyers is up on the lows seen in 2008 but still far below the average seen over the last decade. With deposits now averaging more than a year’s salary, up to 80% of them are dependent on help from their families and it will take several more months of falling prices for that to change.
In that environment, sales by reluctant landlords - or ones like Fergus and Judith Wilson who’ve decided to get out of the market - seem as much if not more likely to go to other landlords as first-time buyers. Especially if, as the Priced Out campaign argues, landlords benefit from extra tax incentives. All of which means the number of reluctant tenants will continue to grow.
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