"The new White Paper’s aim of helping tenants through supporting the build to rent sector could be rendered ineffective with this recent drop in investment from private landlords."
January saw a jump in the number of first-time buyers, with valuations rising by a fifth year-on-year (21%), according to research from Connells Survey & Valuation.
First-time buyers are now responsible for a third of activity (34%), up from a quarter at the start of 2016.
But, while valuations for first-time buyers and those selling homes increased, landlord investment has declined by 63% year-on-year.
This is partially due to a surge in buy-to-let purchases in January 2016 as landlords brought forward purchases to avoid the stamp duty surcharge – but landlord investment is still well down on January 2015.
Buy-to-let activity could worsen further as the effects of the Stamp Duty changes and scheduled cuts to mortgage interest tax relief impact on the market.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “With UK employment close to its eleven year high and weekly earnings rising by 3%, many first-time buyers are fitter financially than they were a year ago. Aided by cheap mortgages rates, aspiring home owners have seized the opportunity to get their first foot on the ladder.
“However, more work is still required to ensure the supply side of the housing market is fit for purpose. First-time buyers tend to be younger couples, keen to start families, so need to be able to move up the rungs on the property ladder easily. The policies to ensure the right homes are built in the right places within the new White Paper should help boost the supply of family homes, but the Government must also deliver on their pledges to build homes faster to ensure a healthy housing sector over the next few years.
“The new White Paper’s aim of helping tenants through supporting the build to rent sector could be rendered ineffective with this recent drop in investment from private landlords. While a potential increase in build to rent homes will take some years to filter through, the slowdown in buy-to-let purchases will soon start to bite, with fewer rental properties coming onto the lettings market. This shortage of supply could fuel competition from tenants with the potential to push up rents.
“There is a serious risk that the Government’s attempt to increase the number of affordable homes to rent will also be overshadowed by the impact of George Osborne’s taxation policies aimed at private landlords. As the Government’s definition of ‘affordable’ is linked to the market averages, rather than tenant incomes, rising rents could mean new ‘affordable homes’ are out of reach for those just about managing.”