The Greater Bristol Letting Agency
0117 973 9394
Accommodation Unlimited Letting Agents

RIP: The Buy to Let Market?

RIP: The Buy-to-Let Market

The death was announced last week of the buy-to-let market. It was thought to have officially passed away in Manchester at the Conservative Party Conference. The cause of death is thought to be the early implementation of the Help-to-Buy scheme.
Ok, the above is tongue-in-cheek but if you believe what some people are saying, the Help-to-Buy scheme is the end of the world as we know it for the buy-to-let market.  Is this true?  Are there armies of first-time buyers waiting, like coiled springs, to join the market?  


I asked several professionals from the Bristol property world what they thought, concluded with my own thoughts and insights at the end. This is what they told me: 


The Mortgage Advisor
(Steve Bolt / Vivid Financial Services)


Q. Does the introduction of the Help-to-Buy scheme signal the end of the buy-to-let market?
A. No… not yet!


“The new Help-to-Buy scheme, on paper at least, makes buying an easier option. However, we’re still finding that affordability remains the biggest issue in obtaining a mortgage. Lenders still need to be certain that, despite a deposit being available, the client can still afford the repayments.  


With property prices on the increase, the mortgage amount required is becoming greater still, but average incomes have remained static, meaning there will always be demand for good rental properties.” 




Q. Does the introduction of the Help-to-Buy scheme signal the end of the buy-to-let market?
A. No… not by a long way!


“Potential buyers will still need to be approved for the full amount they want to borrow, and most mortgage lenders now work on the basis of affordability rather than a simple multiplier of incomes when deciding how much they will let someone borrow.  


An important part of this decision is based upon the ‘credit score’. For example, an applicant with a high credit score might end up with a mortgage around 4 times their annual salary, but a lower credit scorer might only get 3 times – and any existing commitments, including such things as other loans and childcare, are sometimes deducted from this.


This is a particular problem for buyers in Bristol where prices are well above the national average, with an average price for a terraced property at £193,524 in the last twelve months. This means that, to buy this property, a potential buyer will need to save up over £12,000 to cover a 5% deposit, stamp duty and legal costs, and will probably need a stable household income of over £50,000 (which is going to mean two incomes in the household in many cases).   


So I can see this scheme being popular with young professional couples, so long as they are happy to commit to staying in the same place with the same person. For many people who are not yet ready to make that commitment, renting will continue to be a better option for them. 


Also, let’s not forget - we live on a small island with an increasing population, and the introduction of a new group of potential buyers in a market with a limited supply of property will have the potential to drive up property prices. Which means that for those who don’t manage to buy now, the prospect of buying their own home could become even more unattainable later down the line.  


This means that there is always likely to be a big demand for rental property for the foreseeable future.”


The Estate Agent
(Rob Nagle / Leese & Nagle)


Q. Does the introduction of the Help-to-Buy scheme signal the end of the buy-to-let market?
A. No, in my opinion buy-to-let landlords need not worry.


“I am concerned about any measure that artificially boosts the market.  We have been down a similar road before in the late 1980s with the removal of joint mortgage tax relief, which hyper-inflated the market and eventually lead to a recession that took years to recover from.   


Also, with the average age of a first-time buyer being 37, the rental market in my opinion will remain resilient for the foreseeable future.” 


The Solicitor
Hannah Kenward / Lindleys Solicitors)


Q. Does the introduction of the Help-to-Buy scheme signal the end of the buy-to-let market?
A. It will boost the first-time buyers market, but there is no need for landlords to panic just yet.


“Many landlords are worried about a mass exodus of tenants who plan to buy through the new scheme, in turn leading to an over-supply of rental properties. In reality however, this is unlikely. 


Despite the Government’s admirable intentions, many people will still be unable or unwilling to get on the property ladder.  


One of the main issues faced by first-time buyers is the initial cost. Although these costs will be lower, even a 5% deposit is more than many people can afford and financially it will still be out of many people’s reach.  


There is also the affordability of the on-going mortgage payments to consider. Once these costs are combined with the risk and burden of maintaining a property, renting a house seems like a much more attractive proposition. Plus anyone wanting to take advantage of the scheme must pass an income test and their credit history must meet the city regulators’ ‘impaired credit’ standards.  


The other key positive for landlords will be the increase in the property market. With wealthy investors buying second homes, and first-time buyers getting on the ladder, the market is likely to rise, in turn increasing the value of landlords’ properties.
So, no, the buy-to-let property market is far from dead!”
The Letting Agent – My opinion
(Peter Ellis / Accommodation Unlimited)


There are already buy-to-let landlords looking to use the Help-to-Buy scheme.  I have had several landlords with children at university call me already with the following scenario: 
  • ·         Son/daughter buys a 3-bed property as a first time buyer
  • ·         Parent guarantees the mortgage
  • ·         He/she rents out the other rooms and uses that income to pay the mortgage
  • ·         At the end of the course the child either sells the property or converts the property to           a buy-to-let 
  • ·         Child leaves university with little or no debt other than the university fees
Is this illegal, immoral, or just playing the system?  I will leave it for you to decide, but you can be sure that this is a scenario that will play out many times around the country over the next few months. 


Also, we have seen a sea change in how people perceive property in the last few years.   


The desperate need to own somewhere is less a necessity than it once was.  Why own a car when you can use car clubs? Why own music when you can use Spotify? Why own DVDs when you can use Netflix? And why own a house (with all the costs associated) when you can rent?   


Many young people see property ownership as a millstone that they can do without.  Jobs and careers are not for life; flexibility in the workplace means that people constantly move, and the hassle and cost of selling is just not worth it for some.   It is much easier to rent. 


So, yes, I think that for those who want to get on the property ladder the Help-to-Buy scheme will be a bonus, but many people just don’t want to own a property and are quite happy with the flexibility that renting affords.  


As you can see, in the opinion of our experts the Help-to-Buy scheme is not going to fuel rampant house inflation. There are still plenty of barriers to first-time buyers that prohibit the affordability and attractiveness of buying their own home. Plus, with an increasing population on an island with finite space, there is likely to be high demand for rental property for the foreseeable future, and the Help-to-Buy scheme may actually aid landlords looking to take advantage.
So, in the immortal words of Corporal Jones: “Don’t panic!”
Steve Bolt at Vivid Financial Services -



Rob Nagle at Leese and Nagle -



Hannah Kenward at Lindleys Solicitors -