At the London Landlord Property Investment Show this week Rentify chaired a panel discussion of some of the important topics currently affecting landlords. One of these was the predicted impact of Help to Buy (HTB) on the private rented sector. An easy assumption to make would be that if homes are becoming more affordable to first time buyers through HTB, then fewer people will require private rentals and the market will suffer. In fact, as was argued by every member of our panel, the evidence suggests that it will have very little impact on the sector.
The first part of Help to Buy concerns new build homes. Property expert Kate Faulkner pointed out that roughly 200,000 homes currently need to be built in the UK but only 15,000 have been sold under the scheme. Supply is still not being helped while demand remains high and so it is difficult to see how this part of HTB will reduce the number of people looking to rent. The second part of HTB involves being able to buy a property with a deposit of just 5% of the value and a loan of 95%. But 95% mortgages, independent of HTB, are available on the market anyway. Again it’s hard to see what difference the scheme will make to demand for rental properties.
A final interesting point which came up in the discussion was the shifting psyche of the UK population. Traditionally, people in the UK have always expected to buy their own home – an Englishman’s home is his castle – but this is changing and is set to carry on doing so. As more people move to the UK from Europe, renting will continue to become more normal. This shift, coupled with Help to Buy’s failure to deal with supply and the rather un-revolutionary nature of what it’s offering, should mean that the scheme ultimately has little impact on the continued success of the private rented sector.