Cost to homeowners of buy-to-let boom

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by Gill Montia

The National Housing and Planning Advice unit (NHPA) has calculated that the boom in buy-to-let investment has increased the cost of the average home by £14,000.

NHPA, which is an independent body set up to advise the Government on housing supply and affordability, has undertaken the first independent research on the effect of investment buyers on the housing market.

In its report, the unit claims that the average price of a home has risen 150% in real terms since the mid-1990s and that growth in the buy-to-let sector has added an average £90 a month to the typical owner-occupier’s mortgage payments.

NHPA’s chairman, Stephen Nickell, explains: “Without the impact of buy-to-let mortgages, the figure would have been nearer 130%. The typical home would have been £169,000 rather than £183,000. This will increase mortgage payments from £1,100 to £1,190 a month.”

The research is based on national statistics and therefore excludes buy-to-let “hotspots” such as university towns and city centres, where the impact may have been greater.

However, Mr Nickell points out that other factors, such as “interest rates, the growing numbers of households, rising incomes and constrained housing supply have contributed much more to house price inflation”.

The buy-to-let market began its ascent during the late 1990s when buy-to let- mortgages became widely available.

There are now estimated to be over 500,000 private landlords in England, owning around 2.5 million homes.