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Analysis: BTL’s reputation is undeserved


How quickly the buy-to-let market has veered from celebrity to notoriety. For many, the very phrase is synonymous with the wider woes of the housing market.

But the reality is more complex. Our analysis indicates buy-to-let mortgages have played an important but not dominant role in the growth of the private rental sector. What is more, increased lending in this sector since the recession has come from a very low base. Similarly, there is minimal research to suggest buy-to-let lending contributes to inflated house prices.

The Bank of England is monitoring activity with intent, leaving lenders and borrowers to fret that a clampdown is just around the corner. But let us be positive: with careful handling, the extra scrutiny may support a rational appraisal of buy-to-let’s growing role and the need for a healthy private rental sector.

Clearly, buy-to-let has become a more significant part of the bigger picture but that does not mean it should automatically be resisted on principle. Time will tell what impact changes to tax relief will have on landlords’ behaviour and we must hope they do not translate into higher rents or reduced supply. The expanded private rented sector has been crucial in providing homes otherwise unavailable in social and owner-occupied sectors. 

Responsible lending to responsible landlords is nothing to fear. Driving people, including investors, away from the market will only ever be a short-term fix to reducing the pressures created by the persistent shortage of homes. 



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  • Malcolm Finch 28th August 2015 at 10:24 pm

    Whilst a moderate amount of BTL may be sustainable in the longer term I believe there will be a serious correction in the present level of activity in the sector. Sentiment is against further growth in the sector and the level of demand for rentals vs buying does not seem to match the political realities we face today. My personal view is that we should be focusing on how best to transition the housing market to a more balanced proprtion of owner occupied propetties whilst recognising that individuals may wish to invest for the long term in this industry. In order to protect the industry from excessive political intervention we need to transition to a more professional, regulated, industry. This in turn will safeguard the future of BTL by reducing any variability in the quality of service which customers recieve. It is this variability which is one of the main sources of political pressure.