December 8, 2011
Buy to Let Bubble Won’t Last Forever
Buy to let landlords are currently living in a wealth bubble that simply won’t last forever, according to Andrew Gold, chief operating officer at Mutual One. Speaking at the Council of Mortgage Lenders’ annual conference Gold said “It’s a case of when, rather than if, first-time buyers will return to the housing market. When they do — the question is whether they will burst the buy to let bubble.’
Buy to let landlords are currently benefiting from average rental incomes of £720 per month, the highest figure so far recorded. They have recently started experiencing more relaxed approval criteria for buy to let mortgage products as well, and this can only lead to more and more landlords entering the private rental sector. The wealth bubble is at present holding its own but predictions say it could pop at any moment.
Many of the major banks and building societies are yet to make homeowner mortgages more affordable and so first-time buyers still struggle to find the high deposits needed to secure their first mortgage. If this changes though, and homeowner mortgages become more easily available to buyers the buy to let market will take a hard knock…and as Andrew Gold says, the question is will the knock be hard enough to burst the wealth bubble?
