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Landlords squeeze first-time buyers out of house market; COUNCIL CONSIDERS OFFERING GUARANTEES FOR DEPOSITS.


WALES' first-time buyers are being squeezed out of the property market by buy-to-let landlords snapping up the nation's low-cost housing.

Estate agents and economists say first-time buyers are struggling to compete for credit with landlords providing the security of extensive property portfolios.

A report by a Gwynedd council team on affordable homes for locals found a "significant proportion" are being bought up by landlords.

Meanwhile, average house prices in the county's holiday home hot spot of Abersoch stand at PS235,000 for terraced properties, while semis sell for PS418,00, placing them well beyond the reach of many locals. The findings of the investigation go before a Gwynedd meeting on Tuesday that will discuss whether the authority should join a nationwide council scheme that tries to help first-time buyers by offering guarantees for deposits. It is already operating in six other council areas in Wales, including in neighbouring Conwy. Under the scheme buyers provide 5% deposits with the council offering a guarantee for the remainder, which can rise as high as 25%.

Baptist minister Rhys Llwyd moves into his first home on Monday - a terraced house in Caernarfon, Gwynedd, he has bought for PS95,000.

But the 27-year-old says without help from the "bank of mum and dad", in the shape of a PS15,000 deposit, he would have had to save for up to 10 years - beyond his mid-30s - to buy.

Before buying Mr Llwyd was paying PS400 per month to rent a flat in Caernarfon - repayments on his mortgage will total PS425.

He said: "The house I'm buying chose itself in the sense that after I looked at the areas and the houses I could afford it was the only one open to me."

Buyers who have got loans under the deposit guarantee scheme have, on average, borrowed PS108,000.

Up to 95% of people who have bought through the schemes live or work in the local area and as of last September there were no repossessions. If Gwynedd joined, the council estimates PS1m could help up to 40 firsttime buyers get on the ladder. Spokesman for the Royal Institution of Chartered Surveyors (RICS) in Wales, Tony Filice, said buy-to-let landlords have been out-competing first-time buyers for mortgages across Wales for the past 12 months.

Mr Filice, who is also a director of Cardiff estate agents Kelvin Francis, said: "We've had situation where landlords outbid first-time buyers because they've got the ability to borrow more. Because of the increased returns in rent, landlords are prepared to pay more because they have a five or 10-year plan to hold onto the property and if they're getting returns of 5% or 6% they'll pay more."

Cardiff University economist professor Patrick Minford said buy-to-let landlords snapping up low-cost housing is a "growing phenomenon".

But Prof Minford said those trying to get their first foothold on the ladder are not being squeezed out by landlords, but by "blocked credit channels".

But Prof Minford, a key adviser to the Thatcher governments of the 1980s that introduced the "right to buy" for council tenants, said renters who feel deprived because they can't afford to buy are "irrational".

He said renters have greater flexibility over where they live and avoid the "enforced saving" to pay off a mortgage buyers have to accept.

Lee Cecil, Wales' representative for the National Landlords Association (NLA), said the Welsh Government has set up the deposit guarantee scheme, NewBuy Cymru, to help firsttime buyers purchase newlybuilt homes. He said: "So there are schemes out there which allow first-time buyers to buy a little bit easier, but the lack of funding is creating a problem."
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Publication:Western Mail (Cardiff, Wales)
Geographic Code:4EUUK
Date:Feb 1, 2013
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