Economist warns Government assault on buy-to-let could result in 30% rent rises

House-price linked mortgages can help more buyers, especially young people, onto the property ladder according to the below article. Banks have made mortgages available to keep financial institutions solvent. David Miles, a professor of financial economics at Imperial College, London, recently spoke at the Paragon Great Buy-to-Let Debate that took place in London warning against buy-to-let options.

The recent government clamp down on these programs, due to house costs rising above incomes,makes it harder to buy property. By forcing landlords in these situations to pay higher mortgage rates and extra Stamp Duty, the tenants are made to pay 20-30 percent more rent. He does have a suggestion to offset this.

By using house price index loans, these loans fluctuate with property value, it's a good alternative and can help more property buyers get on the property ladder in this ever changing market.

Key Takeaways:

  • House-price linked mortgages could help lenders address the balance of solvency and helping buyers to get on the property ladder
  • The Bank is aware of tensions of keeping financial institutions solvent and making mortgages available so households can get on the property ladder at a younger age.
  • If landlords had to raise rents to mitigate the extra Stamp Duty and mortgage interest relief changes, tenants could end up paying 20% to 30% extra in rent.

Key Quote:

"House-price linked mortgages could help lenders address the balance of solvency and helping buyers to get on the property ladder, a former Bank of England Monetary Policy Committee member has said."

Read the full article:

http://www.propertyindustryeye.com/economist-backed-equity-linked-mortgages/

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