Proposals by the Bank of England to curb buy-to-let lending are premature say landlords.
The measures, out for consultation today; seek to address concerns expressed by the Bank about the risks to the financial system and wider economy of increasing buy-to-let lending.
The Residential Landlords Association, whilst agreeing that no landlord should take on debt that they cannot afford, is warning that the proposals published today are premature given the considerable tax changes being made to the sector which are likely to cool the market.
In February the Treasury Select Committee warned that “measures taken to curb buy-to-let” could “come at a cost to the wider economy” given the importance of the sector to supporting and encouraging a flexible labour market.
David Smith, the RLA’s Policy Director said:
“The Bank needs to be careful that it does not over-react to the current surge in buy to let applications which are aiming to beat the tax increases coming in April. These include a three percentage points extra levy on stamp duty and abolition of mortgage interest relief. It is likely that the impact of these will significantly reduce the demand for borrowing.
“We would urge the Bank to tread carefully and avoid any premature moves that could stifle the supply of the 1 million rental properties the country desperately needs.
The RLA represents 40,000 private sector residential landlords in England and Wales.
Savills research as suggested that 1 million new rental properties will be needed by 2020. Details can be found here
In its report on the Autumn Statement/Spending Review 2015 the cross-party Treasury Select Committee warned:
“Were the measures taken to curb buy-to-let to have a substantial effect, they would come at a cost to the wider economy. Access to a well-functioning, affordable housing market, including for private rented properties, has been widely recognised to be crucial to labour mobility, and hence the overall efficiency of the labour market.”
The report is available here
Curbing Buy-to-Let Mortgages Premature Says RLA – https://t.co/Lu0GkzASim
— LandlordZONE Press (@LandlordZONEPR) April 7, 2016