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fru-gal

Buy-to-let slump puts first-time buyers in the driver’s seat

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1 minute ago, fru-gal said:

Whilst this is obviously welcome news, it's very important to keep in mind that year-on-year comparisons are presently distorted by the rush of buy-to-let borrowing immediately ahead of the introduction of the new additional property SDLT surcharge in April 2016.

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Not yet though. Prices are still based on the insane amounts a landlord can borrow on interest only terms whilst your average first time buyer is restricted by MMR on how much they can borrow.

I suspect we will have a while to go before prices reach levels your average first time buyer can afford.

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1 minute ago, Bland Unsight said:

Whilst this is obviously welcome news, it's very important to keep in mind that year-on-year comparisons are presently distorted by the rush of buy-to-let borrowing immediately ahead of the introduction of the new additional property SDLT surcharge in April 2016.

Yes, I was just wondering where I can find the figures for BTL lending for previous years?

But this could be a double whammy - less BTLers buying all the properties and less demand from tenants as more FTBs ergo falling rents...

Edited by fru-gal

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Less demand will only come from people (Eastern Europeans) leaving the country. Otherwise its market neutral one - less house / flat on the rental market but also one less person looking for a property to rent...

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2 minutes ago, monkeyprojects said:

Less demand will only come from people (Eastern Europeans) leaving the country. Otherwise its market neutral one - less house / flat on the rental market but also one less person looking for a property to rent...

I have rough, finger in the air figure, of about 4m EU migrants on venefits, tax credits prooped up jobs.

Thatll be about 2m rental units coming up.

If the bring in a minium wage of 30k then itll be another 2m more.

Then yheres the non eu migrants earning below 30k.

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For a bit more detail (but not so up to date)

58fb284b1958d_TiLBTLadvances.png.8dd2ea7430562d3533356f8f53ad4226.png

Source: Bank of England, Trends in Lending, April 2015

The latest CML BTL figures for purchases (i.e. not including remortgaging) have BTL running at £800m/month, so if volumes stay stuck at that level we'd end up at £10bn for the year, putting us back at 2013 lending levels.

That is broadly in line with the CML's current forecast (though note the forecast is on a volume basis not a value basis and the I think the value of the average BTL loan  for purchase has been creeping up over the last five years)

Buy-to-let activity levels, thousands

20161412-market-forecasts-chart-2.gif

Source

 

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9 minutes ago, monkeyprojects said:

Less demand will only come from people (Eastern Europeans) leaving the country. Otherwise its market neutral one - less house / flat on the rental market but also one less person looking for a property to rent...

Well, rents are already falling in London and some people are going back (or not coming in the first place). I actually think more people are leaving than the media is reporting (I know quite a few) and if I was an EE looking to leave my country, I don't think the UK would be my first choice anymore.

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12 minutes ago, fru-gal said:

Yes, I was just wondering where I can find the figures for BTL lending for previous years?

But this could be a double whammy - less BTLers buying all the properties and less demand from tenants as more FTBs ergo falling rents...

Agreed. A sector of about a million leveraged landlords with about 2 million interest-only BTL loans is a bit of a beast. If it starts selling up to MMR constrained first-time buyers the we may see some novel dynamics (cough) in the UK housing market.

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Whilst I agree that this articles sonewhat overstates the good news, it is still a joy to read the comments. Currently 16 pages of people agreeing with our beliefs as a simple matter of fact. Any landlord type 'rents will rise' boll*cks is treated with the contempt it deserves. All good.

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16 minutes ago, Lavalas said:

Whilst I agree that this articles sonewhat overstates the good news, it is still a joy to read the comments. Currently 16 pages of people agreeing with our beliefs as a simple matter of fact. Any landlord type 'rents will rise' boll*cks is treated with the contempt it deserves. All good.

Absolutely, and to be fair to Collinson, who is pretty solid on this stuff, he does get SDLT deadline effect squared away in within the opening paragraphs.

Quote

Lending peaked in March 2016, as landlords rushed through purchases to avoid a 3% hike in stamp duty. But since then, lending has gone into freefall.

The CML says that if the March trend continues “we can expect to have seen around 70,000 buy-to-let house purchases in the last year. This compares with 142,000 in the 12 months leading up to the stamp duty change. That’s 42% lower year-on-year”.

The other important thing is that sentiment matters and lots of people only take away the 'bullet points', so 'down 40%' probably gets tucked away in long term memory, not 'lending blip distorts YoY', and that's a good thing for anybody who'd like to see HPI continue to abate.

Lots of the time CML PR plays the way they want it to play - basically ramping house prices. This article is a bit more of a curate's egg, from the perspective of the CML press office.

 

Edited by Bland Unsight

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1 hour ago, fru-gal said:

Yes, I was just wondering where I can find the figures for BTL lending for previous years?

But this could be a double whammy - less BTLers buying all the properties and less demand from tenants as more FTBs ergo falling rents...

1 hour ago, monkeyprojects said:

Less demand will only come from people (Eastern Europeans) leaving the country. Otherwise its market neutral one - less house / flat on the rental market but also one less person looking for a property to rent...

Apologies for slightly raining on the parade but we need to factor in another source of demand for housing, which is young people who have decided to stay living with their parents rather than find their own housing (to buy or rent).

If rising rents and less affordable house prices have led this group to grow over recent years, then falling rents and more affordable house prices should make it shrink again. 

Here are their absolute numbers (data from ONS):

58fb3701aa5d9_ScreenShot2017-04-22at11_56_11.thumb.png.a05e5381574ac8ac46bb7b4216c17c3c.png

The proportion they make of their age group has followed roughly the same rising trend. It was a low of 19% in 1998 and a high of 25% in 2013 and 2014.

However, it's actually dropping already, to 24% in 2015 and 2016. 

 

 

 

Edited by Patient London FTB

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40 minutes ago, Patient London FTB said:

Apologies for slightly raining on the parade but we need to factor in another source of demand for housing, which is young people who have decided to stay living with their parents rather than find their own housing (to buy or rent).

If rising rents and less affordable house prices have led this group to grow over recent years, then falling rents and more affordable house prices should make it shrink again. 

Good shout, makes perfect sense that there is more effective demand at lower prices/rents.

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45 minutes ago, Bland Unsight said:

Good shout, makes perfect sense that there is more effective demand at lower prices/rents.

I'm slightly fascinated by that chart at the moment. This is the pent-up demand that we so often hear about, but if these people do start moving out it creates more empty nesters so in theory frees up more family homes to go onto the sales and lettings markets. (The chart covers all tenures - owner-occupied, private rented and social housing.)

What would 'going back to normal' on this chart mean? Maybe back to 2.6m - 2.7m young people living with parents? That would mean roughly 600,000 - 700,000 people moving out of their parents' home. 

In just two years from 1996 to 1998 we got 300,000 people doing that. Presumably due to economic recovery and housebuilding. 

My theory on the rise in numbers is that it kicked in in 2003 as housebuilding lagged and then went into overdrive with the 2008 financial crisis and the consequent fall in housebuilding. 

If you were lucky enough to move out of home, you were more likely to go into rented accommodation than buy your own place. I can track down the source for that assertion when I have a bit more time. 

From 2013 we get Help to Buy and a housebuilding recovery, which is going to accelerate over the next few years. 

So now what? 

 

 

 

Edited by Patient London FTB

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