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It has been suggested that residential property prices in the UK are unlikely to rise significantly over the next five years, according to one property expert.

While costs are expected to rise slowly across the coming half-decade, the escalation in UK residential property values may not be as marked as some would like to think.

Timothy Lambert, head of investment property at Parallel Investment Management, explained: “It is difficult to predict trends in the current climate of economic uncertainty, observing that although there remains a desire to buy among the general public, many individuals remain wary about the prices they are required to pay. There is also widely believed to be a growing north/south divide in terms of pricing differentiation so people will consider carefully where they are based before committing to buy.”

And while many first-time buyers may be having problems saving the required large amount of money to pay a 25% deposit, other individuals are encountering even more difficulties when attempting to qualify to obtain a mortgage at a competitive rate.

UK Buy-To-Let landlords, on the other hand have the opportunity to reap the benefits of the EU’s monumentous decision not to target Buy To Let mortgages when the European Parliament looks at mortgage lending as a whole in coming months.

UK residential property values have seen the first monthly rise since three months ago.

A new report by mortgage lender Nationwide found that UK property valuations showed a modest increase of 0.3% in May compared with previous months, after April’s figures recorded a 0.3% fall.

The low volume of residential properties up for sale is sustaining the price increase, according to the mortgage lender.

UK property valuations are still 0.7% lower than they were this time in 2011, meaning the average asking price is £166,022.

This reduction is smaller than the 0.9% year-on-year drop recorded in March and April, said the Nationwide.

Robert Gardner, chief economist at Nationwide said “Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming on the market is providing support for prices. This is in part a reflection of the low rate of building in recent years which has failed to keep pace with household formation”.

The mortgage lender’s findings also showed that consumer demand for residential property outweighs the supply due to rising rent costs as a result of people staying in rented accommodation in the PRS because they are unable to raise the deposit or secure a mortgage to purchase a home of their own.

Buy-To-Let Boom Continues !

Buy-To-Let Boom Continues!

According to the Royal Institute of Chartered Surveyors, (RICS), latest Residential Lettings Survey, the UK Private Rented Sector (PRS) experienced sustained growth between February and April 2012, with houses in greater demand than flats.

13% of chartered surveyors reported that PRS rents had increased with tenant demand largely responsible for the growth.

15% of chartered surveyors also reported rises in the numbers of prospective tenants seeking rental properties.

Landlords with Comprehensively Referenced Tenants and Rent Guarantee insurance witnessed an increase in their gross rental yields during the first few months of the year, although the pace has now begun to slow slightly.

Unaffordable mortgage finance, high deposits and stricter lending criteria has also forced many potential home buyers to instead turn to the UK rental market.

PRS rental prices have been rising steadily in the UK since 2009 due to the high demand for suitable rental accommodation available to rent.

An increase in the supply of properties to the rental market has also been cited as a contributing factor of the success of Buy To Let, with 7% of surveyors revealing increases in the numbers of landlords looking to let their properties to private tenants.

2012 Buy-To-Let Mortgage Numbers Increase By A Third

2012 Buy-To-Let Mortgage Numbers Increase By A Third

There are fresh fears that First-Time Buyers (FTBs) and next time buyers are being forced out of the UK residential property market by Buy-To-Let landlords.

The Council of Mortgage Lenders (CML) said that 32,300 Buy-To-Let mortgage loans were made over the first quarter of 2012, a 32% increase on the first three months of 2011.

Meanwhile, according to chartered surveyors E.serv, the number of residential property mortgages lent to first-time buyers in April 2012 fell to their lowest level for 9 months. The company said that loans made to first-time buyers in April numbered just 11,307, a drop of 5% from March 2012 and the lowest since July 2011.

Mainstream mortgage lenders are increasingly reluctant to accept applications from First-Time Buyers due to low Loan-To-Value (LTV) rates and the size of deposit required. Instead there is a preference to lend to Buy-To-Let landlords, who are less likely to default on mortgage payments because they are able to utilise specialist Rent Guarantee insurance products to keep cashflow constant.

Richard Sexton, business development director at E.serv, said “Mortgage companies have begun to scale back lending to first-time buyers. Buy-to-let landlords are taking the places of first-time buyers as there is an absence of them in the market place because they can’t get loans. The UK housing market would be in a far worst place than it is now if it were not for the return of buy-to-let landlords”.

Chief Executive of Dragonfly Property Finance, Jonathan Samuels, said “There has been a seriously sharp spike in mortgage loan applications for buy-to-let properties in the first four months of 2012. A shortage of rental stock and strong demand from the growing number of tenants forced to rent will keep driving the sector forward. There’s a lot of portfolio building, as investors continue to add properties to give them increased exposure. People are seeing Buy-To-Let as a pretty stable place to be because residential property prices are falling and mortgage lenders still see lending to owner-occupiers as risky. Investors feel that there’s a lot left in the buy-to-let market and are putting their money where their mouth is”.

However there are warnings that buy-to-let landlords will need to know what they’re doing when it comes to best rental practices and should take appropriate measures to protect their rental income, such as thoroughly referencing tenants and ensuring Rent Guarantee insurance is in place. Landlords should also be prepared for Bank of England interest rates to rise anytime within the next 12 months as the UK struggles to escape the grip of recession.

The CML said that although lending to buy-to-let landlords has grown sharply in the last year, it is still at only 30% of 2007 levels.

With average loan-to-values on buy-to-let mortgages at 75% and average minimal rental cover at 125% it is unlikely that Buy-To-Let mortgage lending will recover to the same levels seen in 2007, as 25% deposits will prevent many amateur landlords from buying rental property.

UK Government Housing Minister, Grant Shapps, said: “We do not have to make a choice between first time buyers and buy to let. We need both. And while a third of all mortgages went to first time buyers last year, only 12% went to buy-to-let landlords. But I’m determined to pull out all the stops for those who want to get on the property ladder, which is why in March the Prime Minister and I launched the NewBuy Guarantee scheme which is expected to enable up to 100,000 aspiring homeowners to buy newly built properties with just a fraction of the deposit they would normally need.”

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