I have been writing this column for a long time now and while I have addressed many issues one running theme that has cropped up on countless occasions is that too much intervention, both political and regulatory, can be damaging for buy-to-let.
The reason I have made this point so much is because the Government, the Bank of England and the regulator have all attempted to get involved in the sector in ways that, in some cases, would have done more harm than good.
There are plenty of examples that spring to mind. For example, a couple of years ago the government announced plans to make landlords responsible for checking the immigration status of potential tenants (a job that was seemingly not being done by border control). Despite protestation from much of the industry and, what seemed like, a reprieve for some time, the initiative is expected to go ahead this year as part of the Home Office’s Right to Rent scheme.
Then, of course, there is the ongoing threat of regulation. Ask within the industry and many will tell you BTL is a business and thus should have different rules to the residential sector. Regulators appear to have a view that all landlords are naïve and need protecting when, as those working on the front line will attest, they are actually savvy and professional business people who need flexibility and innovation, not red tape.
The regulator is, of course, pressing ahead with what it calls “consumer regulation”, which is welcomed. But how long before the rest of the market is targeted?
There is also the much-maligned reduction in landlord tax relief announced in Osborne’s summer Budget that will do more than cause unnecessary hassle within the industry. In fact, it will undoubtedly see many landlords leave.
I was therefore very pleased to read the Council of Mortgage Lenders supports my opinion and has issued a warning to policymakers that applying too much control could damage a market so important for the private rented sector.
Such outside involvement is occurring because there is an unfounded belief BTL is out of control and needs stabilising when really nothing of the kind is happening. Indeed, we are still almost £20bn off where we were in 2007 in terms of lending figures. With the market expected to hit £30bn in 2015 we will still be a long way off the peaks of £45bn. I am confident that given the environment we operate in this is good clean business.
The CML is urging the Government and other authorities to “consider the effects of uncertainty on the market and, in particular, the potential for a series of reforms to have cumulative, unintended and perhaps damaging consequences”.
I would go one step further and encourage the authorities to gain a deeper understanding of the industry before attempting to meddle in it.