One in five landlords are set to flood the housing market with up to 380,000 properties over the next 12 months, according to the National Landlords Association (NLA). This is a historic high for the number of landlords planning to sell some or all of their buy to let properties.
But if you are a first-time buyer looking to buy your dream home, what does this mean to you?
Why are landlords selling their properties?
19% of landlords surveyed said that they would offload properties over the next year, primarily due to the mortgage interest relief changes. These are being phased in over several years from April 2017 to April 2020, at which point tax relief for finance costs will be restricted to the basic rate of income tax, currently 20%.
If I am a first-time buyer, is this good news?
The NLA say that although the influx of properties might be good news for first-time buyers, it might be bad news for renters. This is because the research indicated that only 7% of landlords are planning to sell and pass the property on to other landlords. This could lead to a significant fall in the supply of property available to those who choose to rent, or have no other option.
What if I am caught in the rental cycle?
For those struggling to reach their desired deposit, the Help to Buy ISA is still a useful way to save for a home. This offers a bonus of 25% on top of savings of up to £200 a month, to a maximum bonus of £3,000. When you are ready to buy your first home, your solicitor will need to apply for the government bonus once your bank has been notified.
Are there any other ways I can be helped?
You may also want to consider several other options to help you onto the ladder. Joint borrower schemes, such as The Post Office’s First Start Mortgage for example, allows a sponsor, normally a relative, to be added as a co- borrower on the mortgage.
Guarantor mortgages are another, which allow you to name someone as a guarantor on your mortgage, who would need to cover repayments if you cannot make them. But whichever option you choose, it is important to seek advice from your adviser before making a decision.
So whether you are ready to buy your first home, or just want to find out more about the Help to Buy schemes available, contact your adviser today to arrange a meeting!