In January the government’s Help to Buy Scheme aimed at buyers of new build housing came into effect. Buyers will need a deposit of 5%, the government contribution is a loan of 20% of the value of the property with the remaining 75% from a bank or building society. The second element of the Help to Buy Scheme is £12bn mortgage guarantee scheme that will be available to lenders.
So what affect will Help to Buy have on the buy to let market? The view from the National Landlords Association is that it will have little impact on the level of demand for private rentals and that is does not present a major concern for landlords as it is aimed at owner occupiers.
However many economists have claimed that the Help to Buy scheme could create a new “housing bubble”. The main impact on landlords is therefore likely to be an increase in property prices for landlords who are planning new investment in 2014. However most buy to let landlords remain optimistic. Paragon Mortgages report that a fifth of landlords are planning further investment in 2014 whilst Mortgages for Business, another specialist lender, reported a rise in mortgaging for the acquisition of new buy to let properties.
It’s probably time to consider expanding your portfolio before the forecast increase in house prices in 2014 and 2015 has a major impact on the cost of acquiring new buy to let property!
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