Tighter lending conditions 'force people to rent'

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Tighter lending conditions brought about by the global credit squeeze will force first-time buyers to rent, an industry expert has claimed.

Jim Ward, residential research director at Savills, said that he thought it was "a thoroughly good thing" if the current market conditions forced people to really consider if they "can afford the loans they're being given".

He added: "It will strengthen rental demand, but that's no bad thing if those people are not taking on mortgages that they could otherwise struggle to pay."

Recently, Paragon reported that landlords have reported stable yields and increasing tenant demand after the international credit crisis.

Its study indicated that yields remained at six per cent last month, while total annual returns jumped to 10.3 per cent.

"The current housing market is in many respects a positive signal for buy-to-let, which has certain counter-cyclical characteristics relative to the mainstream market," explained Nigel Terrington, chief executive of Paragon.

"Tenant demand remains buoyant and investors continue to invest."

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