News

A leading provider of affordable homes in the North West has called for more assistance to be made available to first-time buyers following reports that banks are favouring buy-to-let landlords.

According to an article in today’s Daily Mail there has been a sharp increase in those seeking to invest in rental property as the returns are often greater than those offered by high street savings accounts. The average rental yield reported by letting agents LSL was 5.3% with the most attractive cash ISA offering less than half this rate at just 2.3%.

While investors are benefitting from attractive mortgage rates the flip side is would-be first-time buyers are being turned down for mortgages forcing them into a pattern of long-term renting. One of the reasons given by banks for favouring buy-to-let landlords is that they typically have a good credit record having kept up with mortgage repayments on existing properties.

Conversely, first-time buyers are often seen as a greater risk as lenders have limited information on their ability to manage their finances.

Simon Ashdown, director at LPC Living, said ““We appreciate that banks have to assess mortgage applications on merit but first-time buyers should not be frozen out at the expense of investors.

“The aspiration of home ownership has long been a tradition in the UK, however, unless banks are encouraged to lend to new homeowners we risk seeing a lost generation forced into a pattern of long-term continental style renting.”

LPC Living, owned by the Pervaiz Naviede Family Trust, has built more than 1,300 homes across the North West and has a policy of limiting the number of homes sold to investors. Typically, buy-to-let landlords represent less than 5% of units sold with some developments sold entirely to owner occupiers.