First Time Buyers Need a Lift not a Ladder

It’s being reported in the UK press and on the BBC that first time buyers are struggling to make the first rung of the property ladder, as the average UK property price is in excess of £175K. Even the most affordable location of
Bootle in Merseyside has an average price of just over £112K or four times average earnings.

First time buyers purchasing a house for the average price of £175,000, need a salary of at least £41,300 according to the Charcol mortgage calculator.  Mortgage payments will be slightly less than £900 per month and will rise to £1,079 after 36 months if the base rate stays the same. This is on an interest only basis.

Anyone with an income of £906 per week is in the top 10% of earners, as reported in the 2007 report into ‘hours and earnings’ by National Statistics Online. When annualized this equates to a salary of just over 47K, which isn’t a million miles away from the salary you need to purchase an average UK property.

So wouldn’t it make sense to relax the lending rules on Buy-to-let and allow first time buyers to get on the property ladder as Landlords? Although at first this may appear strange, it would make the property market more accessible to all.

The barrier to borrowing is significantly lower for landlords than it is for owner occupiers. Buy-to-Let mortgages are offered on the capital value of the property and its projected rental income. This is referred to as ‘ring fencing’. Each buy-to-let mortgage is considered on it own merit.

First time buyers beware says the Guardian, but why not say Lenders Help! Help to make it possible for first time buyers to get on the property ladder as Landlords.