Has buy-to-let created a ticking time-bomb for the housing market?

BEFORE the introduction of Buyto-Let (B2L) mortgages in the mid-Nineties, the number of individuals able to become landlords of residential property was very small, because most building societies enforced a policy of one just mortgage per borrower. In those days the first-time buyers bought the existing stock of lower-priced homes as they came onto the market, thereby enabling the sellers of those homes to trade up and move up the housing ‘ladder’. With the advent of B2Ls, buying an additional property as an investment became an reasonable ambition for many existing home owners. According to the Council of Mortgage Lenders, more than 1.7 million B2L loans were advanced between 1999 and 2015. Most of those B2L landlords bought — and continue to buy — the kind of properties that would have been available to first-time buyers. The result has seen an unsustainable rise in prices and a drought of homes available to

those looking to get a foot on the ladder. There’s a ticking time-bomb here. If these landlords retain their B2L properties and the number of first-time buyers shrinks, where will the buyers come from for the next properties up the chain? As an estate agent with many years’ experience, I believe the housing market, as we currently know it, is in real danger of stagnating in the next few years if the rise of B2Ls is allowed to continue unabated.

GEOFF GREGORY, Market Harborough, Leics. it’S well-documented that many house buyers are being priced out of central london and are now looking to buy in more affordable areas within commuting distance. So while rising property prices in london have attracted much attention, the growth in residential values in key commuter towns has been widely overlooked. in Reading, house prices increased by 16.1 per cent in the year to January 2016, the greatest increase across the whole of the UK. in Slough, they rose by more than 15 per cent. A recent survey conducted by the website totally Money found that High Wycombe, where prices went up by 11.3 per cent last year, was the most desirable commuter town in which to buy a property. From there, the cost of an annual rail ticket into london is in excess of £4,000, yet with an average house price of £346,000, and based on 2015’s rate of house price growth, the commute would be repaid in just 39 days — a compelling statistic. Residential developers are increasingly chasing the market west into the Home counties and M4/M40 corridor. We note that this ripple has been accentuated since the South east exceeded the pre-crash levels in mid-2013, with the market now building real momentum. As well as high-quality new homes and leading schools and universities, landmark infrastructure improvements have played an important part in driving this growth, with the new elizabeth line (crossrail) already having a positive effect three years from its completion.

JACk SMALES, partner, knight Frank, London W1.