Proposals by the Treasury to hand greater powers to the Bank of England to make access to buy to let lending harder risks choking off the supply of rented housing says the largest landlords body.
The Residential Landlords Association is arguing that the consultation (published today, 17th December), coming on top of extra tax payments by landlords and stamp duty increases on buy to let properties, has the potential to cut off investment in the private rented sector.
According to Government figures 83% of all new dwellings created between 1996 and 2013 were private homes to rent. With PwC predicting that almost 60% of young people will be in rented housing by 2025, there is a desperate need for the private rented sector to keep expanding. All that the different measures by the Government will achieve is to create a greater shortage of housing, driving up rents for tenants.
The consultation comes as the Council of Mortgage Lenders has today concluded that buy-to-let mortgage lending is “still much lower than in the 2006-8 period.”
Commenting on the consultation, RLA Chairman, Alan Ward, said:
“There is no clear evidence that the property boom is caused by buy-to-let investors, when rising prices are mainly concentrated in London and the South East. This is largely fuelled by foreign investors and speculators treating our property as a commodity.
“The Residential Landlords Association supports the principle of the Bank of England ensuring that lending does not pose a risk to the stability of the financial sector. It is important that lenders do not saddle landlords with debts which they cannot pay back. But landlord investment is essential to the supply of homes to rent.
“The overwhelming majority of landlords are responsible borrowers providing homes as a long-term business.”
– The RLA represents 40,000 private sector residential landlords in England and Wales.
Further information about the RLA can be found at www.rla.org.uk/ or by following it on twitter @RLA_News.
– The PwC analysis is available at here
The most recent English Housing Survey has noted that between 1996 and 2013, the private rented sector accounted for 2.5 million of the 3 million new dwellings created in England. Details can be found on page 9 here
– The Council of Mortgage Lenders latest market analysis, published today reads:
“Buy-to-let has been a major source of recent growth in lending. Now in its fifth year of recovery, it continues to advance strongly. It will account for about 9% of all property transactions this year – still much lower than in the 2006-8 period, and around 16% of mortgaged transactions. Future prospects are closely tied to potential macro-prudential regulation and incoming tax changes. We currently expect buy to let house purchase activity in 2016 to fall below its 2015 level, and for activity in 2017 to fall below the level seen in 2014.” It can be read in full at here