The Council of Mortgage Lenders (CML) have claimed that the government may be basing its decisions concerning the private rented sector (PRS) on 6-year old data.
The Council has “ticked off” the government for not updating its Private Landlords’ Survey for some six years – had it done so, say CML, it may have had a “better understanding” of the needs of the private rental sector.
Posting on the CML blog, communications manager Bernard Clarke, is urging the government to “back off” from further reform of the PRS and buy to let with its seemingly punitive taxation and regulation.
Clarke says the landlords have yet to come to terms with and absorb the effects of the latest series of tax changes which are likely to have significant implications for the PRS. He thinks the government has taken a “one-size-fits-all” regulatory approach which does not necessarily fir with the diverse nature of the buy-to-let market.
Starting next week after the 5th of April a stamp duty surcharge of 3% will be imposed on buy-to-let property purchases, and the first phase of the reduction in mortgage interest relief will bite, starting with a 25% reduction in 2016/7, ending with a 100% reduction to the basic rate of rate by tax year 2020/21. Further, relief will be claimable as a tax credit, which is applied after the normal income calculation, which means that a landlord’s income subject to tax will be inflated by his or her full rental income amount.
Clarke thinks that the Bank of England’s Financial Policy Committee could impose limits on buy to let Loan-To-Value ratios, and the interest cover ratio, which assesses rental income relative to the cost of the mortgage:
“We believe that [tools to control buy to let lending] should only ever be used with great sensitivity, and preferably only after consultation and the publication of analysis and assessment of the likely effects”.