Buy to Let

First-time buyers take over from buy-to-let borrowers

Christina Hoghton
Written By:
Christina Hoghton

There were almost five times the number of first-time buyer mortgages as new buy-to-let deals completed in January

First time buyers are driving the housing market, according to new lending statistics from UK Finance.

They are taking over from buy-to-let investors, where demand is falling.

There were 25,100 new first-time buyer mortgages completed in January 2019, up 4.6% over the same month in 2018. This suggests some life remains in the residential mortgage market.

In contrast, there were 5,500 new buy-to-let home purchase mortgages completed in January 2019, 1.8% lower than in the same month last year. While the sector continues to decline due to tax and regulatory changes, the rate of decline is falling. Remortgaging also saw some falls.

Simon Heawood, CEO and co-founder of Bricklane.com, said: “Over the last year, the government has introduced a raft of new tax penalties designed to make individual buy-to-let a far less attractive investment for landlords. These numbers show that the impact of those penalties has begun to bite.

Property confidence

“It’s not the case that people have fallen out of love with the property market though — 49% still think it’s the best way to save for retirement. However for increasing numbers of buy-to-let landlords, going at it alone doesn’t make financial sense anymore. We expect to see more and more investors looking for alternative tax-efficient routes into the property market, which allow them to access bricks and mortar returns, without the drawbacks of being a buy-to-let landlord.”

Matt Andrews, managing director of Mortgages at Masthaven, said the political uncertainty doesn’t seem to have impacted the first time buyer market: “Whether this be attributed to government initiatives such as the extension of the Help to Buy scheme, the ‘gifting’ of wealth from parents to children, or an increase in flexible products offered by lenders, this segment of the market is in good stead for whatever political and economic decisions are made in the coming weeks.

“More could still be done for the buy-to-let market to encourage greater purchase activity. The slight softening in remortgaging figures for this sector suggests landlords remain committed to the market, greater product innovations, alongside a range of housing tenure that meets consumer needs, would certainly be welcomed so the sector can reach its full potential.”