The average age of a FTB without parental support is now 37 according todays Daily Telegraph but over 40 and rising according to Paul Howard of the Nationwide Building Society at last months Mortgage Event. FTBs can no longer compete with BTL landlords without parental support as the average deposit required is now approximately one years income. BTL landlords as well as propertyowners have benefited from the rapid house price inflation over the last decade due to easy availability credit.and are in a much stronger position than FTBs to purchase. I understand that this is not just the case in England & Wales but also in Scotland where the legal system differs.

The last government tried to encourage FTBs back into the housing market by increasing the nil rate band on Stamp duty land tax to £250,000 up to 24th March 2012 but this has not worked because of the current prices are still to high. Also whenever a suitable property comes onto the market it is usually snaped up by a BTL landlord. This is particularly prevalent in the South East of England.

The coalition Government has indicated that they intend to try to unblock the housing market by pulling certain levers and I have suggested a couple of posible actions to them:-

Firstly the very radical action of removing tax relief on loan interest for BTL landlords which would certainly go a long way to reducing house prices and making the BTL loan market virtually extinct. It would create a lot of negative equity and be very unpopular with many propertyowners including BTL lanlords. However it would be extremely popular with tenants and a generation of 20-30 year olds still living at home with parents as large numbers would suddenly be in a postion to buy. It would also have an affect on the capital adequacy of many of the lenders which may further restrict funds. It would however stabilise the property market after a period of turmoil.

A second less radical plan that I have suggested is to increase Stamp duty land tax for BTL landlords to such a penal extent that it is no longer cost effective for them to enter the market but this would further dampen an already stagnating housing market. However if the government does nothing many parents will have their offspring continuing to stay with them until their deaths and the children receive an inheritance. In less than ten years the average age of a FTB will probably have reached over age 50 if the government takes no action on the BTL market.

I can now longer see how FTBs can compete with BTL landlords in the housing market. Even if a method was found to assist FTBs without restricting the BTL it would continue to cause the rampant house price inflation we saw during the last government. It is inevitable the Government will act in favour of the FTB at some stage but when? Probably when the media and press start to tell the full story of the FTB issue!

The problem with the housing market is not BTL but the shortage of mortgage funds for FTB and the high percentage deposit needed and the product fees and other costs attached to these mortgages. Lenders and government should find away make FTB mortgages lower (The Chelsea Building society SVR is 5.79%) It is unfair to blame buy to let landlords as mortgages for any purchase attracts product fees of typically 3% plus 60% loan to value making it not easy to enter the market.

Redundant,

I intially favoured this option as I thought it would mean a lot of existing BTL landlords would put their homes on the market and create an over supply of cheaper end properties which would allow FTBs to purchase. However the over supply is bound to have a negative impact on house prices initially which could also affect the banks capital adequacy situation. I hope you are right about it not affecting house values as it would bring in a lot of money to the Treasury as well as assisting a whole younger generation!

Anonymous 1 needed this 'Off the Record'

The market cannot be sustained where we have an earnings ratio disproportionate to the first time buyer ability to pay for a mortgage. We cannot sustain a BTL market where it would be cheaper to buy if only you can get the morgage. Again, this is disproportionate. The correct relationship has to be re-established between buy and let, for the benefit of the economy as a whole to work. As a society none of of us will gain if we have a generation unable to purchase their own home.

Its another example of a government medling in market affairs, with the result that distortions become acute, and remedies painful. Unintended consequences? Yes. Why? Broken Parliamentary process due to too much legislation and too little attention to detail.