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Landlords blast ‘premature’ measures to curb buy-to-let

Sally Walmsley
Written by Sally Walmsley

Proposals by the Bank of England to curb buy-to-let lending are premature according to the RLA.
The Bank claims increased buy-to-let lending is now a risk to the economy as a whole and wants to impose new controls, including strict affordability tests taking into account borrowers’ costs and personal income.

Proposals by the Bank of England to curb buy-to-let lending are premature according to the RLA.

The Bank claims increased buy-to-let lending is now a risk to the economy as a whole and wants to impose new controls, including strict affordability tests taking into account borrowers’ costs and personal income.

It also wants to see lenders take into account potential future interest rate increases and a special underwriting process introduced for ‘portfolio landlords’ with more than four properties. The new measures have gone out for consultation today.

The Residential Landlords Association, whilst agreeing that no landlord should take on debt that they cannot afford, is warning that the proposals 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 one million rental properties the country desperately needs.”

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Magazine and Digital Editor for the NRLA. With 20 years’ experience writing for regional and national newspapers and magazines she is responsible for editing our members' magazine 'Property', producing our articles for our news site, the weekly and monthly bulletins and editorial content for our media partners.

7 Comments

  • If all the Housing Benefit paid as rent to Buy to Let landlords was used instead to invest in social housing stock would there be an increase in the supply of truly affordable homes?

    • Stoke had £2,000,000+ from Right to buy which they could have used to build social housing. But no they put it on deposit for 2 years then gave it back to the central government as the time limit for spending it had come to an end. Their feeble excuse “We do not yet have a housing development department.” Do you think this mentality would change if the money was somehow Housing benefit?

  • This Government, for whom I voted, seems to be doing all it can to make middle income landlords lives difficult. We are very necessary – many of my tenants are on short term contracts and would not wish to buy a property. Please will they leave us alone!
    Marion

  • What is it with the conservatives? they seem to think landlords are bad for the country. Not everyone wants to buy a house. The stamp duty is so high now that moving every few years is no longer an option. Buying a house has become a big deal. If you cant afford to or don’t want to buy a house you need to rent. Rents will increase if the government continues to penalise landlords and continues to sell off council houses without replacing them.

  • I do not understand the thinking of government .If people can not afford they rent.I rent out property and as a result of the coming removal of interest off set I am going to sell 50% of my holdings and be free of the worry of mortgages etc. This will mean evicting around 15 families .Yes I will pay tax but where will my ex tenants go ? I have already rid myself of the DHSS blight .If I am a typical landlord then there is going to be a great deal of homeless families and with very few council or housing association property available where are these people going to be housed .One must remember put a problem in front of a entrepreneur and he will find a way around it because it is survival .I have housed some people for ten years or more .It is a sad way to deal with people .

  • The expectations the Prudential Regulation Authority outline are quite reasonable. The majority of lenders already take into account current and future affordability. And ensuring that lending is responsible and sustainable is a laudable goal. A return to the lending volumes of 2007 shouldn’t come hand in hand with a return to the standards.

    But the dust is still in the air from the last three Budget announcements. I agree that they could have waited until we know what effect changes to stamp duty and tax relief will have.

  • I am a small scale property developer who buys property to refurbish and then either sell on or rent out. I am not sure if there will be a mechanism to get the 6% tax levy refunded if I sell a refurbishment within a set period of time, will I have to pay the 6% tax and then get it refunded, will I need to sell it within the financial year to get a refund or will I not get the 6% back at all? It seems that my business is being penalised and the Government seems to be favouring foreign investors above the likes of me? I am a member of the RLA and am still unsure what my position will be going forward?

    Best regards

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