Buy-to-let "not to blame" for first-time buyer crisis

The growth of buy-to-let is not to blame for pricing first-time buyers out of the housing market, an expert in property economics has said.

Professor Michael Ball from the University of Reading said buy-to-let investors had improved the housing market's stability.

Speaking at the annual conference of the Association of Residential Letting Agents (ARLA) today, Professor Ball added the only way property prices would come down is by building more houses in desirable locations.

"Buy-to-let has increased the size of the private rented sector and extended the alternatives to both owner-occupation and social housing," Professor Ball explained.

"It has also spread renting wider, to towns and suburbs that had little or no private renting before. It has assisted in the regeneration of inner city neighbourhoods and in some areas it has helped to revive the housing market."

The professor said it was not clear house prices would be lower without the emergence buy-to-let "as housing demand is still with us but supply is likely to have been less".

He added buy-to-let had "sheltered" many households from the full impact of house price rises as renting can often be a cheaper in terms of monthly costs than being mortgaged.

"[Renting] enables households to build up their own equity and, although tenants do not share in capital gains directly, they do so through lower rents and lower risk.

"They can do this while living in good standard accommodation, as competition in the rental market is now greater. This appeals to young, mobile people in employment. Overwhelmingly these are the client base of the buy-to-let landlord."

The reason more younger people were renting rather than owning property compared with previous decades was due to changing lifestyles, employment patterns and affluence as well as the rising costs buying a home, he argued.