Comment: It’s a numbers problem, stupid

Richard-Adams-700.jpg

We can support landlord clients looking to purchase but we cannot make the numbers work for them if they do not

In this marketplace it seems possible to hold two different views on the same subject just by recourse to two different sets of statistics.

According to one recent headline, there are signs of recovery in the buy-to-let purchase market with the number of investment property enquiries on Rightmove up 30 per cent since April. That may well be but enquiring about a property and actually purchasing it are two very different things.

Indeed, most of us within the mortgage market will have seen something more akin to the Council of Mortgage Lenders’ latest statistics, which revealed £3bn of buy-to-let loans were made in August – down a significant 12 per cent year-on-year. And of those loans nearly two-thirds were for remortgage activity, proving that the purchase side of the market is still, at best, subdued.

At the same time, we have the Royal Institution of Chartered Surveyors suggesting an extra 1.8 million households will be looking for private rental property by 2025. At current rates, there will be a considerable shortage.

We are all aware of how increased demand and lack of supply will play out in terms of rents payable during that period. It all adds up to a large problem.

So what can be done? Unfortunately, it appears to be out of our hands. As advisers, we can support landlord clients looking to purchase but we cannot make the numbers work for them if they do not.

The use of limited company vehicles to purchase and expand house portfolios may provide part of the answer but they too require taxation advice, understanding and deliberation, and there are potentially some negatives along with the positives.

It is this series of unfortunate events that leads me to conclude that buy-to-let activity may well be reliant on remortgaging for the foreseeable future.

Unless we get a much needed reprieve across areas such as stamp duty and mortgage interest tax relief in the Autumn Statement, the Government’s policy of cutting off buy-to-let’s nose to spite its face may be far more successful than anyone could have imagined.

Richard Adams is managing director of Stonebridge Group