According to a recent article published in the Telegraph, the rise in foreign investors hoping to cash in on the strong buy-to-let market in the UK is pushing up house prices and crowding out first time buyers.
Most foreign investment has traditionally been in the commercial property sector, but with the demand for buy to let property so high, many foreign investors are making the move into the residential lettings market. Unfortunately, the surge in demand for properties has meant first time buyers are experiencing much greater competition when looking for properties at the lower end of the price scale. And as one mortgage specialist has pointed out: “If first-time buyers weren’t competing with landlords, then prices would be cheaper.”
The lack of available properties is also causing average rents to go up (particularly in London and the South East) and with demand far outstripping supply in many areas, landlords are putting their rental prices up.
Buy to let yields were reported to be 5.3 percent in July, which represents a much better return on investment than placing your money in a savings account. Consequently, it is hardly surprising that foreign investors are taking advantage of such favourable conditions. It is also becoming easier for would-be landlords to invest their cash in the buy to let market since lenders are offering some great low interest deals at the moment. Indeed, the figures indicate that lending to landlords is around 20 percent higher than the same period last year.
So times are good if you are a landlord, but less so if you are a first time buyer!
