Buy-to-let Watch: Change breeds innovation


The fact that buy-to-let will not be so straightforward in future may present us all with an opportunity to be creative

I read an interesting article in one of the nationals last weekend.

Unsurprisingly, it focused on the buy-to-let market and the tax changes introduced by George Osborne earlier this year. Little did the Chancellor know, when announcing his overhaul to landlord tax relief, that he was providing journalists with months’ worth of articles predicting the demise of the sector.

Surprisingly, however, this one was quite optimistic, focusing on the fact that investors were undeterred. Rather than admitting defeat, they were looking for alternatives, trying new approaches, thinking outside the box.

Some were rethinking their location strategies to avoid the stamp duty hikes and combat the challenges presented by lenders revising their rental calculations. Indeed, some were considering investing – dare I say it – outside London.

I find it amazing the market has been so London-centric for so long that the idea of investing outside the capital is regarded by many as a last resort. I have been quite vocal of late about the areas of huge potential that exist north of the M25.

And I think that is one of the positives we can take from this year. Challenges in any industry and any sector push us to be cre­ative. The challenge of catering to people whose credit history was not perfect, for example, led to the creation of the sub-prime market, which, while having its issues, has been a significant sector for many.

Perhaps the fact that buy-to-let will not be so straightforward in future presents us all with an opportunity to be creative: for investors, a chance to broaden their horizons and portfolios; for lenders, a push to create products that cater to the new world.

Indeed, Accord recently showed it was reacting to market changes in announcing it would accept applications on buy-to-let properties worth £75,000 and above.

Its previous minimum value had been £100,000. Perhaps, rather than viewing this as a time of challenge, we should embrace it as a time of change. The buy-to-let market knows how to do innovation better than most. The rise in products such as second charge buy-to-lets and the revolutionary Castle Trust mortgage are evidence of this.

So let us look to wider areas, different properties and new products. Let 2016 be the year when the market and everyone in it showed their flexibility and embraced the opportunity to try something new.

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Ying Tan is managing director of The Buy To Let Club