First time buyers facing rising rents

29-Aug-2007

First time buyers looking to get onto the property ladder have had their savings hit by buy-to-let landlords raising rents, new research suggests.

For the majority of prospective homeowners currently living in rented accommodation, rents have risen by an average of 3.04 per cent over the past three months, putting the annualised rate of growth at 12.7 per cent, Paragon Mortgages has said.

With buy-to-let mortgages now accounting for a record 12 per cent of the market, Paragon has advised that the market provides an outlet for those who want more flexible ways of living, but the sector is nonetheless continuing to reduce the prospects of first time buyers getting onto the housing ladder, it has been suggested.

"The opinion from Paragon that buy-to-let-mortgages are providing market stability is frankly wrong," advised Helen Adams, managing director of first time buyers' online advice centre FirstRungNow.com

"The facts are that landlord properties rose in value one per cent in just one month, their annual returns including rent are increasing and they are sitting pretty on every front.

"When interest rates go up, the cost is simply passed on to their tenants - often caught in a rental trap.

"The truth is that the rise in buy-to-let and the ready availability of buy-to-let mortgages has not caused market stability but ground it to a halt for first time buyers who want to get onto the first rung of the property ladder.

"We at First Rung Now would like to see buy-to-let for one and two bedroom properties clamped down on in order to give first time buyers a fighting chance.

"The desire to buy a first home and get onto the property ladder is as strong as ever," Ms Adams added.

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