Only the wealthy can afford to become buy-to-let landlords because most investors have been priced out of the market, the Royal Institution of Chartered Surveyors said yesterday. Financial Times
Affordability in the buy-to-let market has deteriorated dramatically in just five years.
Higher costs to enter the market have made it more difficult to buy housing for investment purposes, said David Stubbs, RICS senior economist. 'It is certainly tougher to get into the market now than for a long time,' said Stubbs. 'The upfront cost of an averagely priced house has risen very quickly.'
Stubbs said that these elevated costs would contribute to a marked slowdown in the growth of the buy-to-let market over the coming quarters.
RICS estimates that prospective investors now needed to pay a deposit of 30% of a property’s value on most buy-to-let mortgages, about £65,600 for the average UK house, in order to get a foothold on the buy-to-let ladder. That compares with the £10,100, or 8% of an average property’s value, needed in 2002 – a deterioration of more than 500%.