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Buy-to-let boom increased house prices only by extra 7 per cent

The buy-to-let boom has only pushed up house prices by an additional 7 per cent, according to a new study.

The National Housing and Planning Advice Unit, a body that advises the Government on housing market affordability, has found that the boom in BTL has had only a moderate impact on rising house prices.

The study challenges the idea that the BTL boom over the last five years has been responsible for pricing first time buyers out of the market.

The NHPAU says that buyers of an average house today who took out a 100 per cent mortgage are making monthly payments just £90 higher than if there had been no BTL boom.

If the boom had not happened, the average house price in the second quarter of 2007 would have been £169,000 rather than £183,000.

The NHPAU says that the rising number of households, constrained supply and interest rates have made more of an impact on house price inflation than BTL.

Assetz chief executive Stuart Law says that the NHPAU figures back its long-term view that BTL investment has not significantly affected house prices in the UK to the detriment of FTBs.

“With prices reported as only an extra 7 per cent higher due to buy-to-let investment, the benefits of the sector evidently outweigh the disadvantages. The economic contribution of the private rented sector to the economy is well documented, and with three million households currently housed by private landlords, it is clear that a much-needed service is being provided by investors putting money into the sector.”

Law says that BTL landlords provide much needed off plan pre-sales to developers which is something FTBs are reluctant to do.

“If buy-to-let landlords didn’t buy from developers early on, before schemes are built, there would be far fewer schemes delivered, leading to an even greater housing shortage.”

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