Rents and buy to let mortgages on the rise, whilst unlet properties also increase 150pxRecent research from Experian has revealed the number of unlet properties is on the rise, raising concerns that the buy to let market could be overheating.

Ever since the housing market crashed in 2008, efforts have been made to encourage first time buyers and home movers, but experts believe the success of schemes such as Help to Buy, could be having a detrimental effect on the buy to let market.

Experian have revealed that the amount of properties put up ‘to let’, has increased by 11.4% compared to this time last year. In London however, the rise has been steeper, with a year on year increase of 26%, compared to just a 2% increase in the number of properties being listed for sale.

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The figures from Experian, which show an increase in the number of properties coming onto the rental market, echo recent data from the Council of Mortgage Lenders, who revealed £5.1 billion was loaned to landlords in the three months to June; almost a third higher than in the same period last year.

However, despite the national average, not all areas have seen an increase in the number of properties put up for let; Wales and the East of England actually recorded falls of 0.8% and 3.2% respectively.

Rents continue to rise

The HomeLet Rental Index, published earlier this week, revealed rental prices are continuing to rise, despite the glut of properties coming onto the market.

The HomeLet research found:

  • The average cost of renting a home in the UK rose by 1.8% in July, to £826
  • The average cost of renting a home is up 3.6% on last year, setting a new record
  • Rents in London are still the highest in the country, now averaging £1,300 per month
  • However, rents in the South-East have fallen to £841, down from £851 this time last year

Andy Richards of HomeLet Business said: “Tenants already seem to be facing increasingly expensive rental prices due to the lack of mortgage availability, so it will be interesting to see if the new Help to Buy scheme helps to ease the pressure.” (Source: Telegraph)

Renters want to buy

Experian’s research also found, many tenants could look to buy their own home, where it is affordable. This rise in first time buyers and re-entrants to the housing market has been boosted by a recent increase in mortgage availability, helped by Government initiatives, such as the Help to Buy and Funding for Lending schemes.

Data release earlier this week from the Council for Mortgage Lenders (CML) echoes Experian’s findings, as they reveal first time buyers are now entering the market more quickly than at any other period since 2007.

Jonathan Westley, Managing Director of Consumer Information Services at Experian UK & Ireland, said: “Some lenders and estate agents are reporting improvement in the housing market, with the Council of Mortgage Lenders data showing confidence and activity growing strongly at the bottom of the property ladder.  Our latest figures do, however, show that this trend is not being seen across the whole of the UK. In some regions, the housing market remains challenging for first time buyers, particularly in London, which is constraining activity levels for lower value properties and keeping a lid on prices in many areas. This is reflected in the surge in rental properties on the market.”

He continued: “This insight into the changing face of the UK’s property market is essential for any financial services, utility or insurance company in order to truly understand the impact on credit strategies.” (Source: Experian)

House prices rising

There is however growing concern from many housing experts that the recent house price rises, coupled with low interest rates and Government initiatives to help the housing market, will lead to the creation of a further bubble.

The Royal Institution of Chartered Surveyors (Rics) recently revealed house prices have risen for the fourth consecutive month in July, making this period the fastest for growth since November 2006.

Furthermore, surveys from the Land Registry, Nationwide and Halifax, are all showing strong house price growth.

Are you a first time buyer or a buy to let investor? Do you need mortgage advice?

Our mortgage adviser, Linda Wood, is here to help you.

If you would like advice on your options please call  Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

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