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Buy-to-let gained chokehold over first time buyers in 2015

10th March 2016 Print

New statistics from reveal that the rapid growth of the buy-to-let market during 2015 has come at the expense of first-time buyers, despite Government initiatives to encourage home ownership.

The proportion of buy-to-let mortgage enquiries on grew by 4.4% to 18.2% during 2015 compared with 2014, whereas the proportion of enquiries for first-time buyers fell by 3.7% to 23.5%. The inverse correlation indicates that the buy-to-let market has gained a chokehold over first-time buyers, as many struggle to get out of rented accommodation and on to the housing ladder. January showed no signs of a reducing market, as the first month in 2016 showed year on year growth of over 16% and 62% increase compared to December, reinforcing the sentiment that the current buy-to-let market may be unsustainable.

Evidence indicates that if the market continues in its current direction, the number of enquiries for buy-to-let mortgages will outstrip the number for first-time buyer enquiries, which would be a blow to the Government’s home ownership drive. However, with the new stamp duty on buy-to-let purchases, there is little expectation that this will materialise.

The buy-to-let market saw remarkable growth during 2015, of over 23% in enquiries on, despite the Treasury’s best efforts to reduce the rise of ‘Generation Rent’ and encourage home ownership. The initial cut on tax relief also did little to reduce the swelling of the buy-to-let market as enquiries rose by 14% in the three months after the announcement made by the Chancellor at the Summer Budget, compared to the three months before. However, with the new stamp duty on buy-to-let properties, announced at the Autumn Statement, coming into effect this spring, many expect the market will finally dampen.

Elsewhere, January proved to be a particularly buoyant month for the mortgage market as the number of enquiries rose by more than 8% compared to 2015. It seems that January is the time that consumers get their respective houses in order with a recent study by finding that 44% of consumers used the month to ‘sort out’ their finances.

Jody Baker, Head of Money for, said: “The buy-to-let market has been subject to both extensive discussion and criticism over the past year with even the Bank of England’s Financial Policy Committee labelling it a risk to the UK’s financial stability. This data only reinforces the view that over the past year, families and others looking to get a foot on the housing ladder are being priced out by landlords. It was great to see the Government take action in the Autumn Statement but time will tell as to what the material impact will be on the market after 1 April.”