A finance house says it’s seeing an increase in tenants offering to buy their properties off their landlords.
James Briggs, head of personal finance intermediary sales at the financial services platform Together, says the latest house price figures may exacerbate the trend.
Nationwide yesterday reported that house prices have fallen an average of 3.8 per cent across the UK in the past year: this is the worst figure since July 2009, although it is only modestly lower than the 3.5 per cent fall recorded last month. As a result, the price of a typical home is now 4.5 per cent below the August 2022 peak.
Briggs says: “While the continued downward spiral in house prices last month doesn’t ease fears of a crash – this scenario is still unlikely. Affordability is still one of the greatest challenges facing borrowers today.”
He continues: “We’re seeing more demand for renters to purchase properties directly from their landlord to kickstart their homeownership ambitions.
“… Current buy to let investors are having to carefully weigh up mortgage costs against achievable and affordable rent. And, as BTL landlords roll off fixed rate deals over the next 12 months, we may see investors releasing these properties to the market – offering even further opportunities for potential homeowners.”
Affordability remains a key issue according to Karen Noye, mortgage expert at financial advisory service Quilter.
She says: “The previously published residential transaction data for June paints a similarly bleak portrait, recording a year-on-year dip. On a positive note, the seasonally adjusted data did show a 6.0 per cent uptick compared to May, though the overall picture remained grim, with transactions down by 15 per cent compared to June 2022.
“This consistent downturn mirrors the mounting strain on affordability that's impacting the property market in real-time. Prospective first-time buyers, however, might hold out in hopes of further price reductions that could bring homeownership within their reach.
“An illustration of this affordability crisis is captured by recent ONS statistics. In England, homeownership seems to be a luxury reserved for the top 10 per cent of income earners, who can afford an average-priced house with less than five years of income, assuming an average annual disposable household income of £33,000.
“This translates to a hefty affordability ratio of 8.4 years of income.
"Meanwhile, the housing landscape appears more equitable in Wales, Scotland, and Northern Ireland, with the top 30 and 40 per cent of income earners, respectively, being able to afford an average home within the same time frame. This contrast underscores a widening wealth gap, pushing homeownership further beyond reach for many in England.
“The future may see affordability pressures driving a downturn in house prices, with other recent indices indicating a flattening or decline in house prices. A significant drop in prices or a massive wage surge would be necessary to improve these troubling affordability ratios. However, both scenarios seem unlikely. As such, the construction of new homes to alleviate the supply-demand tension, thereby assisting first-time buyers, could emerge as a primary point of contention in next year's election.”
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There is nothing wrong with tenants buying property off landlords if both parties wish this to happen. A big problem would arise if landlords were compelled to sell to tenants.
As Labour have already suggested a Right to Buy scheme 🏴☠️
Sounds good….. if they can pay the current value, no silly discounts 🤔💰
John McDonnell previously said they would set the price. 🏴☠️
Granted he’s not senior anymore, but the trend is for more sillier policies amongst MPs.
Simon, they have just got a discount 3.8%
The suggestion is the tenants should get a discount similar to that, that council tenants recieve.
Good luck buying mine 😂
Get rid of CGT or at least lower it to something sensible and it would make the idea far more possible.
Have 0% SDLT if the landlord buys a replacement house and it might even make the idea mainstream.
I would be happy to sell any of our properties at market rate to any tenants. CGT could be an issue but less now than it was since the screw has been tightened. We have a tenant who has been in for eight years and I really don’t want to get to the point of eviction when we sell. If government really want to end private rentals a CGT and maybe stamp duty discount when tenants buy seems like a good idea.
Some Tenants can well afford to buy and have been robbing landlords since the introduction of HMO Licensing Schemes in 2006, many sub-letting and filling the reduced capacity that the landlords are not allowed to have…
The Government must a have a financial debt wish. When Tenant buys they loose all those licensing fees, fines Penalties trumped up banning & re- payment Orders, they’ll also loose the huge amount of income tax that the landlords pays on Rents received from the property, they are like the landlords sleeping partner taking up to 45% of any profit with no input but despise him.
Great points, Michael - and all correct, too.
I've come across some despicable behaviour by tenants who have brought in sub-tenants - charging each one more than I was charging for the whole property! Some very decent Japanese girls were robbed in that way. I mention the nationality because they were easier to cheat having just arrived in the country.
Ellie, I used to rent a studio in Earls Court in a converted house. The agent was called Jamal. I didn't trust him because he was foreign (some 'dodgy country') and because he has the name of a liar /traitor in the Sinbad films (I know). Anyway I spoke to my landlord who fell out with him. After people moved in he knocked on their doors charging extra fees for things (reference checks, or admin fees or something). Any some Australians who paid kicked up a fuss with our landlord. He refunded them and sacked him.
I said he didn't try with me. But as my Sri Lankan landlord said "you're English"...
It is easy to be cheated- and I am glad that you weren't Nick. I manage everything myself and don't allow sub-letting - although I can't be sure it isn't happening in a two bedroom flat which I let to a couple. As Michael pointed out so well, it is under occupation of flats due to licensing which can lead to cheating.
Hopefully there will be no suggestion of tax breaks available for tenants which are not available for others?
Most of them haven't really done anything. Bojo used to write motoring articles for a men's magazine. His articles were popular. But as the editor said they checked the mileage when they dropped the car off. They checked it when picked up and 0 miles driven. He's just a liar. Doing journalism. Writing stories and opinions on things for a living. Michael Gove is another one. No track records of any successes.
Some of us are old enough to remember that this is history repeating itself. In the late 1950s and 60s government legislation had made it totally uneconomical for landlords to let property. In those days I worked for a firm of Chartered Surveyors with a big residential management book. The landlords were only too glad to sell properties to their tenants at a big discount and get rid of the liability of a property with a tenant that couldn't be got rid of and who was paying a rent which couldn't be increased. The tenant was the only person interested in buying. Eventually the government realised that after selling the council house stock and the private landlords selling up their was very little private rentals available. Hence the Housing Act 1987 designed to encourage landlords by being able to charge a market rent and being able to easily get possession if needed.
Means less tax income for gov... But hey, these Tory tossers who are bad as the mirror relfection opposite parties love pissing in the pool before passing the keys to 10 downing street
Government to spend £10m of tax
Government to spend £10m of tax payers money that landlords paid them to stop landlords having their Property back its disgraceful.
Those Treasonable Policy’s can only have the effect of Collapsing the economy and bringing the Country to its knees, have the Russians taken over, another unnecessary stupid interest rate hike today should speed up the Collapse.
It's disgusting. But there are too many people and not enough properties of all tenures. Chucking £10m at something is cheap for some good headlines that they are helping renters. To be honest they are not as far as I am concerned. I just got some tenants out. I'm doing it up slowly. Hopefully the market will improve to sell. But I fear I will have to let it go for not a lot, or reluctantly take on another tenant. But having automatic legal aid (not even merit or means tested) fills me with dread. Everyone is against landlords. I am happier leaving it empty.... I sleep better and get less grey hairs...
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