Poll
How does the housing white paper affect the BTL market?
Demand for buy-to-let (BTL) finance could be further reduced by the recent housing white paper, a property expert has warned.
Last week, the government unveiled a housing white paper which proposed a range of measures to promote build-to-rent (B2R) schemes, such as attracting major institutional investment in new large-scale rental housing developments.
Another suggestion involved making it easier for build-to-rent developers to offer affordable private rental homes, as opposed to other forms of social housing.
However, Kate Faulkner, managing director of Property Checklists and regular BBC commentator, has now warned that these proposals are the latest in a string of attempts to reduce the need for private landlords.
“That’s the government’s aim – hence the tax increases on BTL and the lower tax rates on financial investment: they are trying to switch BTL investment to institutional.”
'Tenants will be the ones to suffer'
Landlords could pass extra costs on to tenants
This latest blow follows the introduction of stricter affordability stress tests by the Prudential Regulation Authority (PRA) on 1st January, which one broker insisted could trap landlords as “mortgage prisoners”.
Just weeks after the PRA’s changes came into effect, specialist lender MTF revealed that the raft of changes faced by landlords had contributed to 84% of brokers failing to secure a BTL mortgage for some of their clients during the fourth quarter of 2016.
Steve Olejnik, chief operating officer of Mortgages for Business, urged the government to ensure that such changes do not deter private landlords from investing in the BTL market.
“Ultimately, landlords’ costs have a huge impact on their tenants’ rents, and policymakers must therefore ensure that property investment remains an attractive proposition to all landlords, and not just institutional investors.
“The regulatory environment has become more challenging for private landlords over the past year, and supporting them should be on policymakers' radar.”
Similarly, Kate argued that it was not just landlords who could be left to bear the brunt if B2R could not compensate for the fall in BTL supply.
“…Tenants will be the ones to suffer most as stock will dry up pretty quickly.”
'We must not lose focus on the current market'
The white paper advocated the use of high-density developments
However, not all industry figures shared Kate’s concerns over the housing white paper.
Although Chris Treadwell, head of commercial and development at Enness Private Clients, acknowledged that the BTL market had been showing signs of a marked reduction in lending, he did not believe that larger investors would step on private landlords’ toes.
“…I don’t think the white paper proposals will have a huge impact on the private investor BTL market, with the focus being on those sites not currently of interest to the big housebuilders, typically sites consented for 50-100 units.”
James Lidgate, director of housing at Legal & General Capital, suggested that institutional investors would be at the forefront of the solution to the housing crisis.
“It’s great news that the government recognises the important role institutional money can play in the build-to-rent market.
“More and more people are choosing to rent, and it’s important they get access to high-quality, well-managed accommodation, specifically designed for the rental market in urban locations [where] they want to live.”
Meanwhile, Paul Clampin, chief lending officer at Landbay, welcomed the paper’s support for the private rented sector (PRS), which included a greater emphasis on higher-density housing developments.
Nevertheless, Paul stressed that this increased supply would not happen overnight.
“It will take time to deliver necessary large-scale rental developments, so we must not lose focus on the current market.”
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