A perfect storm?

UK first time buyer crisis – unfair, yes, but investors can and will benefit….

Heard the one about the property expert who believes giving up Netflix and Coffee will allow people in the UK to buy their first property? OK, I think we all know she was talking somewhat flippantly but the comments made recently by Location, Location, Location star, Kirstie Allsopp, have certainly caused a kerfuffle in the UK media and inevitably amongst the prime social media outlets.

So, what is she referring to and how deep is the first-time buyer crisis in the UK? Furthermore, how does this affect existing UK landlords and investors seeking to become one?

Before we do, here’s the Metro take for those that have missed the uproar.

First time buyer facts:

As we all know, the UK is a nation that loves property. It is instilled in our culture and with it comes a huge media presence with a myriad of TV shows, podcasts webinars etc, etc. This in turn then fuels various forms of pressure with young professionals and families expected to grab the first rung of the property ladder sooner, rather than later. We must also remember that the industry provides an opportunity for many to grow capital, build portfolios provide an income and offer an alternative to standard pension schemes.

But how are First-time buyers faring right now? The honest answer, as of today, is that it is most certainly a struggle for the majority. Although the numbers of first-time buyers completing on purchases remains on the rise, we need to factor the rise in population and the fact that the overall process is becoming harder. Factors include

  • Property prices continue to rise – we have just witnessed the highest January rise in seventeen years.
  • Higher initial deposit required
  • High inflation affecting costs of associated services
  • Less access to the Bank of Mum and Dad

The next fact is a startling one and one that all potential property investors need to be aware of.

In 2007, prior to the worldwide financial crisis, the average age of a UK first time buyer was 27.



And it’s only going to get higher……

Source: Compare the market

Quite staggering figures but what does this mean for investors?

Well, as much as we do not want to see these impacts on the first-time buyer market, the cold hard fact is that for landlords and future landlords, it undoubtedly results in a positive impact.

Higher first-time buyer age averages lead to:

  • People will be renting for longer, paying rents for longer and helping landlords to achieve yield income for longer.
  • Longer term tenancy agreements signed by tenants as they look to lock in prices.
  • Potentially fewer void periods.
  • Competition will organically lead to rental increases.
  • Increased scope for long-term capital growth.

However, there are some caveats to be aware of:

  • Price corrections will occur. They always have done and always will.
  • Wages to mortgage/rental requirement ratios are rising. Tenants will be prone to defaulting on both.

With these factors in mind, any investor must invest in a fashion that can be considered as the ‘smart way’ of investing.

Making sure your hard-earned capital is working for you in a strategy that is considering all aspects of the market is critical.

How to Invest the smart way.

We all know the UK offers investors exciting opportunities for the future but how do we ensure we are positioned correctly to achieve optimal growth whilst maintaining a healthy yield?

Firstly, we must act now and avoid inertia taking hold.

Secondly, we need to be investing over the longer term and accepting market fluctuations along the way.

Thirdly, remove our emotion from the process. This is a number driven exercise.

With all these three boxes ticked we then focus on:

  1. Locations with high commercial activity – usually city centre or nearby commuter towns.
  2. Developments on mortgage lenders approved lists – allows us to capture value.
  3. Identifying professional tenants – reduce risk of void and default periods.

If you need guidance and advice on any of these areas, please contact us and one of our experienced consultants will be in touch immediately.

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please complete the form below and we will be in touch.


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