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Demand for rental property in the UK is soaring at the moment, as a growing number of potential first time buyers are being forced to put their home owner loan plans on hold due to a lack of loan affordability and deposit requirements.

As loan to value ratios seem to be reducing for the first time buyer market and more lenders are tightening their requirements for a new loan, would be first time buyers are being forced to rent a house instead of being able to buy one.

The news comes following the latest figures which have been released by the Association of Regulated Letting Agents (ARLA), who have seen letting demand reach an eight year high.

At the same time, figures from the home owner loan broker John Charcoal, show that first time buyers only accounted for around 7 per cent of the whole home owner loan market throughout September this year.

There are also concerns that if the Financial Services Authority enforce their proposals to restrict lending on home owner loans and mortgages, with lower loan to value ratios and lower income multiples in loans, it will become even more difficult to obtain a new loan and even more first time buyers will be driven from the housing market.

First time buyers are the lifeblood of the housing market and if they are unable to access a loan and get onto the housing ladder, this is likely to have a detrimental effect on the whole of the market.

Ian Potter of ARLA said “More than 70 per cent of our agents have stated that consumers coming into their offices are being forced to rent because of the pressures exerted on potential home buyers.”

“This is real evidence of a generation forced into renting and the Government must recognise the need for regulatory protection for them.”