A finance house says it’s seeing an increase in tenants offering to buy their properties off their landlords.

James Briggs, head of personal finance intermediary sales at the financial services platform Together, says the latest house price figures may exacerbate the trend.

Nationwide yesterday reported that house prices have fallen an average of 3.8 per cent across the UK in the past year: this is the worst figure since July 2009, although it is only modestly lower than the 3.5 per cent fall recorded last month. As a result, the price of a typical home is now 4.5 per cent below the August 2022 peak.

Briggs says: “While the continued downward spiral in house prices last month doesn’t ease fears of a crash – this scenario is still unlikely. Affordability is still one of the greatest challenges facing borrowers today.” 

He continues: “We’re seeing more demand for renters to purchase properties directly from their landlord to kickstart their homeownership ambitions.

“… Current buy to let investors are having to carefully weigh up mortgage costs against achievable and affordable rent. And, as BTL landlords roll off fixed rate deals over the next 12 months, we may see investors releasing these properties to the market – offering even further opportunities for potential homeowners.”

Affordability remains a key issue according to Karen Noye, mortgage expert at financial advisory service Quilter.

She says: “The previously published residential transaction data for June paints a similarly bleak portrait, recording a year-on-year dip. On a positive note, the seasonally adjusted data did show a 6.0 per cent uptick compared to May, though the overall picture remained grim, with transactions down by 15 per cent compared to June 2022.

“This consistent downturn mirrors the mounting strain on affordability that’s impacting the property market in real-time. Prospective first-time buyers, however, might hold out in hopes of further price reductions that could bring homeownership within their reach.

“An illustration of this affordability crisis is captured by recent ONS statistics. In England, homeownership seems to be a luxury reserved for the top 10 per cent of income earners, who can afford an average-priced house with less than five years of income, assuming an average annual disposable household income of £33,000. 

“This translates to a hefty affordability ratio of 8.4 years of income. 

“Meanwhile, the housing landscape appears more equitable in Wales, Scotland, and Northern Ireland, with the top 30 and 40 per cent of income earners, respectively, being able to afford an average home within the same time frame. This contrast underscores a widening wealth gap, pushing homeownership further beyond reach for many in England.

“The future may see affordability pressures driving a downturn in house prices, with other recent indices indicating a flattening or decline in house prices. A significant drop in prices or a massive wage surge would be necessary to improve these troubling affordability ratios. However, both scenarios seem unlikely. As such, the construction of new homes to alleviate the supply-demand tension, thereby assisting first-time buyers, could emerge as a primary point of contention in next year’s election.”