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Landlords in bidding war with pensioners over bungalows

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landlords competing with older buyers for bungalows
landlords competing with older buyers for bungalows

Landlords are betting on a boom in retired renters and battling downsizers to snap up the dwindling supply of bungalows.

Demand for single-story homes surged throughout the pandemic as young families sought bigger plots with gardens and the potential to extend. But older buyers have a new, chain-free competitor to contend with: landlords.

Bungalows are increasingly in demand with investors keen to cash in on an ageing tenant population. The number of bungalows purchased with a buy-to-let mortgage has almost doubled since 2017, rising to 3,370 last year, according to data from UK Finance, a trade body.

The supply of bungalows on the market has depleted significantly post-pandemic and price tags have soared as a result. But landlords are undeterred.

The average buy-to-let mortgage for a bungalow last year was £164,391, compared to an average £153,976 loan for a purchase in the wider market, according to analysis by Paragon Bank, a lender.

Richard Rowntree, of the bank, said landlords were happy to pay a premium for single-story homes, but this would likely result in higher rents charged to tenants.

He added: “The challenge for landlords is providing the right homes for older tenants. We expect to see an increase in bungalows in the private rented sector, as well as homes specifically targeting older tenants, over the next decade.”

The share of tenants living in a bungalow in the UK is forecast to triple from 3pc to 9pc within the next 15 years, according to research by Paragon.

Rising house prices have pushed the prospect of homeownership out of reach for many and one in 20 people aged over 65 now rent from private landlords, according to the English Housing Survey. Mr Rowntree said the pace at which landlords snapped up single-story properties would soon accelerate to meet the increased appetite from older tenants.

Demand for bungalows in the first three months of this year was 63pc above the five-year average, according to property website Zoopla. It means older downsizers must now compete in an increasingly frenzied market in which bidding wars are rife.

But Mark Manning, of Northern Estate Agencies Group, said owner occupiers had held their own against investors.

He said: “Over the past couple of months we have sold 10 bungalows for over the asking price. Each one was sold to an occupier and in four cases they were bidding against an investor to win the property.”

In one instance a two-bedroom bungalow in West Yorkshire sold for 20pc above its £255,000 asking price, with multiple investors losing the bidding war to an owner-occupier.

“The only times we do see investors outperforming owner-occupiers are on bungalows that have significant potential to be developed into much larger properties, or those that are in such a bad state of repair that the majority of traditional buyers are put off.

“In these instances we see investors buying them, refurbishing them and then either renting them out or selling them on,” said Mr Manning.

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