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Friday, July 15, 2011

BTL versus FTB grudge

Almost one in ten of the mortgages advanced in the first three months of this year were for BTL property up from 5.4 per cent at the lowest point of the economic crisis.

The increase in BTL popularity has been driven by a rising rental market and poor returns on alternative non property investments.
The increase in BTL investment activity has again stirred up criticism from the first time buyer fraternity who feel increasingly squeezed out of the market by investors competing for similar types of properties.

Katy John from the first time buyer campaign group, Priced Out commented, "It’s all very well mortgage companies coming up with innovative mortgage products to encourage first-time buyers, but in the real world they are competing against investors, who will always manage to outbid them, because most don't need a deposit – they already have equity in their existing properties.”

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1 comment:

David GW Bartlett said...

First-time buyers competing against investors "who will always manage to outbid them" (Katy John, Priced Out)

On the contrary, in my humble opinion: Investors are seldom willing to pay the same price for a property as an owner-occupier will (be they first-time buyer, or otherwise).

Once the asking price goes above a certain threshold for a property, the yield no longer stacks up for an investor and so they move on. Owner-occupiers are far more likely to 'fall in love' with an individual property, which can end up in a bidding war if there is more than one lovestruck buyer.

I think most investors and first-time buyers would both agree on one point, however: house prices, generally, are too high.