BTL impacts on UK house prices

The paper, entitled ‘Buy-to-let Mortgage Lending And The Impact On UK House Prices’, showed that BTL had led to an increase in house prices of 7 per cent between 1996 and 2007, equating to average property price growth of £13,000 across the UK.

Although the paper strived to indicate that the impact of the BTL market on prices had been minimal compared to other forces, such as changes to levels of disposable income and interest rates, the technical report concluded that the 7 per cent house price growth attributed through BTL growth could have priced a number of potential buyers out of the housing market.

The paper also detailed economic and social benefits that the sector had bought to the wider housing market and in a statement suggested that: ‘A downturn in BTL lending could potentially create modest downward pressure on house price inflation.’

Peter O’Donovan, mortgage manager at Bestinvest, was unsurprised by the results. He commented: “BTL has become a lot more accessible for more people, and more people have become interested in property as an investment due to the uncertainty in other areas such as pensions, which has led to an increase in prices.”

Andy McQueen, managing director of UCB Home Loans and The Mortgage Works, welcomed the report, suggesting that the 7 per cent increase had led to an average mortgage payment increase of £90.

He said: “This report will highlight the positive benefits to the economy that a healthy BTL market can bring.”