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IMLA: Deterring buy-to-let investment will harm tenants more than landlords

Measures which discourage investment in the private rented sector can only push up rents and harm tenants more than landlords, a report from the Intermediary Mortgage Lenders Association (IMLA) has warned.
The report entitled “Segmenting the UK mortgage market” examines the key issues facing the main segments that make up today’s mortgage market. The report defines the market segments as:  first time buyers, moving homeowners, buy-to-let (BTL) investors, lifetime borrowers, remortgagers and further advances.

Assessing the possible impacts of July’s BTL tax changes, IMLA argues a higher tax burden for landlords – which will push some into losses after tax and raise the effective tax rate on their buy-to-let above 100% – may slightly skew the market in favour of owner-occupied house hunters, by reducing the price that landlords are prepared to pay for any given property.

The risk, however, is that these  changes and the threat of tighter BTL mortgage regulation will constrain the supply of available rental properties at a time when the fundamentals of population growth and low housing supply are driving an increase in demand, and that institutional investment will fail to make up the gap.

The IMLA report shows total lending across the mortgage market this year was running below its 2014 level from January to May. Since then, there has been a sharp recovery and 2015 may be shaping up to be a mirror image of 2014.

By far the most robust recovery has come in buy-to-let, but this must be placed in context of an 81% decline after the recession between 2007 and 2009. This compares with a 60% drop in remortgaging volumes, 56% among home movers and 53% among first-time buyers over the same period. BTL lending volumes remained 40% below their 2007 peak in 2014, and IMLA argues that it is responding to rather than driving growth in tenant demand in the private rental sector.

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  • Brit Sixteen Sixty Four

    Rents won't go up much, landlords are already changing pretty much max rents they can get away without voids. After all they still put up rents every year despite record low mortgage fiance. Also every landlord who sells gives first time buyers a chance to buy reducing rental demand.

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    @Brit sixteen sixty four....

    Your opinion seems very un-informed and a view something like the clowns at shelter would come away with...

    Not all Landlords put up rents every year, I know that I don't. I tend to wait until a tenancy changeover to adjust rents up or down and yes I said down as this can happen too.

    You fail to miss the point that there is allegedly not enough homes in this country... BTL people leaving the market is a disaster for renters, as it shrinks the number of properties available. The less properties available for rent, results in less choice, which means higher prices. Thats basic supply and demand. I would also argue that its more likely to be a good home that left the PSL than a bad one for a variety of reasons.

    You also assume everyone wants to own a house. Again not everyone wants to be burdened with a large mortgage and responsibility of that size.

    The answer to lower rents is to increase the supply of quality housing and to increase the number of homes available in the UK in general.

    Oh and my final point is yes there is record low interest rates, but please do not be foolish to think this is passed on to the consumer. Most of my properties are on a rate of 4.19%. Is record low interest rates being passed on to you through your credit card and card loans? I didn't think so.

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    Would have to agree with all Graham says as that applies to me too


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