Bob Young: Why the political agenda for buy-to-let?

Bob Young Fleet 2014

What are the buy-to-let measures meant to achieve and has anyone truly thought through their consequences?

We are well into March and predictions for the buy-to-let sector after the end of the month are coming thick and fast.

The Government’s various measures have apparently been designed to level the playing field between landlords and first-time buyers – the ‘fear’ being that the buy-to-let sector is becoming too big and therefore poses a risk to financial stability.

This view was expressed again recently by deputy governor of the Bank of England Sir Jon Cunliffe, who said that, if a large number of buy-to-let landlords were to up and sell at the same time, house prices could fall sharply.

This point of view got me thinking. If the Bank does fear this situation, why is the Government introducing measures that – some commentators believe – might hasten landlords’ exit from the sector and – presumably, following Sir Jon’s logic – produce a flood of properties onto the market, which would cause house prices to fall in the manner outlined?

A recent survey by the National Landlords Association suggested the Government’s measures against landlords might lead to over 500,000 investment properties being put up for sale by their owners.

I am not convinced the figure will be anywhere near this. Indeed, I believe most landlords will hang on to their properties, work within the new measures and, if they are looking to grow their portfolios, be increasingly likely to do so through tax-efficient vehicles such as limited companies.

But once again it seems odd to have a political agenda being pushed against landlords that may deliver the kind of ‘doomsday scenario’ envisaged by Cunliffe and his Bank and regulatory colleagues.

It leaves you wondering what the end goal of these measures actually is. What are they intended to achieve and has anyone truly thought through their consequences?

At the moment, clear answers are definitely not discernable.

Bob Young is chief executive officer of Fleet Mortgages