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Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
A shortage of properties for sale and a surge in buy-to-let landlords rushing into the market are pushing up house prices, according to the Royal Institution of Chartered Surveyors (RICS).
The RICS reports that while supply has increased slightly, it is not enough to meet a sharp rise in demand from buy-to-let investors, who are seeking to beat the 1st April deadline for a 3% Stamp Duty surcharge.
Housing stock grew over January, from 44.5 properties per branch in December to 46 at the start of the year. However, this is still down 21% compared to January last year.
The Chief Economist at the RICS, Simon Rubinsohn, explains the figures: “The rise in new instructions in January, although modest, is very welcome.
Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up
“However, with buy-to-let investors rushing to get into the market ahead of the Stamp Duty hike, the near term pressure on prices is, if anything, intensifying despite a higher level of supply.”
He continues: “How the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen, but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite.
“Against this backdrop, it is perhaps not surprising that the key RICS indicators point to further rent, as well as house price, increases.”1
As this news arrives, as does the latest data from LSL Acadata, which states that the average house price in England and Wales is now £290,642 – up 0.2%, or £700, over January.
Valuations firm e.surv expects there were 85,432 house purchase mortgage approvals in January, up by more than 20% from the 70,837 recorded in December. It predicts that January’s approvals will be the highest for almost nine years, since October 2007. It names the cause of the rise on a surge in buy-to-let mortgages.
Yesterday, we reported that rent price growth for new tenancies in London is at its slowest rate for around two years, announced by HomeLet. Find out more: /london-rent-price-growth-slowing/
SpareRoom has also seen price growth slowing in London, with rent increases in commuter towns such as Swindon and Luton rising by up to four times faster than in the capital. The most expensive room rents in the country are in Reading, at an average of £548 per month.
Another index has also launched, a buy-to-let study by Property Partners, which combines rental income and capital growth. It believes that the best returns for buy-to-let landlords are in the East of England, at 13.2%, with the lowest in the North East, at 4.1%.
London-based estate agent Marsh & Parsons has experienced a 24% increase in applicants over January compared to January 2015. It believes the significant rise is from a surge in first time buyers. The CEO of the firm, Peter Rollings, reports that first time buyers now account for 66% of sales, up from 49% last year. It is believed that this will rise further, as a huge 15,000 prospective buyers have already shown interest in the Help to Buy London scheme. Read more: /over-15000-hopeful-buyers-interested-in-help-to-buy-london/
1 http://www.telegraph.co.uk/finance/property/news/12150353/Rare-rise-in-number-of-homes-for-sale-but-its-not-enough-to-satisfy-huge-demand.html
