The renting versus house purchase debate is an age-old one. Events over the past 12 months or so have helped clarify the property-related priorities of some but also served to further muddy the waters for others.
Although homeownership aspirations appear to remain strong, rising house prices and demand means that these continue to be a challenge for many. Research from Aldermore recently revealed that 38% of prospective first-time buyers said they were rejected for a mortgage once (compared to 36% in March 2020), and 43% said they were rejected for a mortgage more than once, a large spike from just 17% in March 2020.
It added that many prospective first-time buyers are now more likely to be rejected for multiple reasons, rather than just one. The main reason for a rejected mortgage application was that the prospective first-time buyer has poor credit history (41%), up from 19% in March 2020. Other top reasons for prospective first-time buyers being turned down for a loan included deposit size (39%), not being on the electoral roll (39%), administrative error (35%), and being self-employed or a contract worker (33%).
As outlined in the data, the home buying process can often be confusing and complicated, especially for a generation where financial situations are more diverse than ever before. Changes in circumstance, ongoing concerns and barriers to homeownership really do highlight the role played by the private rented sector in ensuring that a wider variety of the UK population has access to homes that match these requirements.
It is also an area where landlords have become even more professional. Changes in taxation and regulation have resulted in landlords becoming more attuned to the needs of the individual properties within their portfolios and their tenants’ ongoing requirements. These are the types of landlords who are demonstrating a long term commitment to the BTL market and taking advantage of some favourable market conditions.
This trend was highlighted in recent data from Paragon, in conjunction with BVA BDRC, which outlined that an estimated 19% of landlords intend on investing in property over the next 12 months. Landlords already managing larger portfolios were said to be most likely to purchase, with 31% of those with 11 to 19 properties and 28% of those who manage 20 or more properties intending to expand these portfolios.
As outlined by Richard Rowntree, managing director for mortgages at Paragon, when commenting on this data; “News that for the first time in over four years more landlords are intending on buying than selling is fantastic. This is because not only is it good for the industry but, more importantly, it’s good for tenants. More investment in the private rented sector contributes to higher standards, a moderation of rents and more choice for the millions who rely on the private rented sector for flexible, affordable housing.”
This is an important point to finish on. We continue to see landlords developing a greater appreciation over the changing needs of their tenants and this can only be a good thing moving forward. And these standards must continue rising across the board in order for the private rented sector to finally get the recognition it deserves.
This post was first published on this site.