The buy-to-let (BTL) market is strengthening due to the first-time buyer (FTB) market weakening, as a result of coronavirus, it was revealed on a Mortgage Introducer Webinar.
Landbay’s chief executive and economist, John Goodall, and chairman and mortgage funding expert Tony Ward were the speakers for the webinar, which was hosted by Mortgage Introducer’s publishing director Robyn Hall.
Ward outlined that, as a result of lenders tightening their criteria and reducing their maximum loan-to-values (LTVs), many FTBs are being priced out of the market.
As a result, potential buyers are being forced into the rental market, which in turn strengthens the BTL marketplace.
Ward also pointed to the economic influence on potential buyers, he said: “People are unable to buy due to rising unemployment levels, which are set to increase when the furlough scheme reaches its conclusion.”
He added that BTL has held up very well as an assist class, with the expectation that this will continue.
As the furlough scheme and stamp duty holiday near their respective conclusions, it is predicted that less and less people will have the capability and the risk appetite themselves, to purchase property.
Goodall noted that Homes of Multiple Occupancies (HMOs) have risen in popularity due to lockdown restrictions.
He said: “You are now seeing an increasing number of young people particularly, turning to HMOs as a viable option due to lockdown restrictions.”
He added: “People are realising that if there is another lockdown they do not want to spend it by themselves, and therefore are looking to HMOs to share with friends in order to avoid this.”