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Dramatic slump in buy-to-let lending blamed on Government intervention

KREMER NS

Regulatory intervention has led to a huge 80% slump in buy-to-let investment.

That’s according to the Intermediary Mortgage Lenders Association (IMLA), which has charted a steep drop from £25bn of net investment in the sector in 2015 to just £5bn last year.

IMLA said tax changes had deterred landlords from investing and created difficulties re-mortgaging.

It warned that a period of policy consolidation was needed to assess the impact of recent changes before any further “punitive action” is contemplated.

It added that buy-to-let had had a positive effect on the PRS, estimating that between 2000 and 2017, UK buy-to-let landlords invested £289bn into the sector, meeting rising tenant demand by bringing 1.8 million properties into the rental market.

At the same time, real rents have fallen 4.4% across the UK, it claimed.

However, new tax and regulatory measures introduced in the last two years, such as a 3% Stamp Duty surcharge and the removal of mortgage interest tax relief, have deterred some landlords from expanding their portfolios and prompted others to abandon the market,.

Kate Davies, executive director at IMLA, said: “The raft of regulatory and tax changes that have hit the buy-to-let market in the last year have far-reaching effects that are still yet to be fully realised.

“We know that the majority of people regard owner-occupation as the tenure of choice, but for many this is not an immediate option. We also know that those who would in the past have rented from their local authority or housing association now need to rent privately.

“Various interventions by Government have apparently been aimed at encouraging more first-time buyers and making investment in buy-to-let less attractive to existing and potential landlords.

“But the PRS plays a vital role in our housing supply and it’s essential that a sensible balance is struck, if tenants are not to be disadvantaged by shrinking stock and higher rents.

“We urge the Government to reassess the impact of the recent far-reaching regulatory changes to buy-to-let investment and allow a period of policy consolidation.

“Our nation’s PRS investors provide a vital service that’s vital to millions of UK tenants. We need to support and protect a sector that does so much for so many.”

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Source:: Dramatic slump in buy-to-let lending blamed on Government intervention