View more on these topics

Editor’s note: Goodbye-to-let?

Barker-Sam-2017

To all Mortgage Strategy readers with zero interest in buy-to-let, I’m not going to dress this up – you’ll be doing a bit of skimming of this issue.

Buy-to-let has always dominated the market’s attention, and newspaper headlines, far more than its overall share of total mortgage lending would suggest. This week is no exception.

But if we turned the clocks forward a year, would the market still be talking so much about buy-to-let?

It is clear that buy-to-let is a market in slow decline. Last year the sector racked up £40bn of lending, but revised forecasts from the Council of Mortgage Lenders suggest this will fall to £33bn by 2018.

This is no reflection of the underlying health of the buy-to-let market. More than 36 lenders play in the sector, with more than 1,200 products available. But regulatory and tax changes have chipped away at the class.

It is unlikely these changes will be undone any time soon. The chancellor’s attention will be on matters such as Brexit; HMRC is notoriously reluctant to unwind tax policy; and the Bank of England has had buy-to-let in its crosshairs for some time.

Indeed, some say the slow contraction of buy-to-let is exactly what the Bank wants. It has been vocal in the past on the fact that it sees buy-to-let as ‘systemically’ risky, and so a steady stream of buy-to-let landlords selling up is a win for the Bank on three fronts. Not only would this dial down any systemic risk but it would do so in a way that did not cause property market panic and tanking house prices. Landlords selling homes would also free up housing stock, which in theory would aid first-time buyers.

And with new-build houses being built at snail-like speed, it is unlikely the Bank will do anything imminently to change the new status quo.

So it is easy to assume incumbent buy-to-let players would be glum about the future. But I have detected relatively little negativity. Instead the market is showing impressive willingness to get on with business and to diversify where necessary.

Buy-to-let will always be a big market. But if I was a betting man I’d say this time next year some of the market attention currently focused on it will swap to other areas that are currently niche but have a definite buzz about them: new-build, HMOs, holiday lets and semi-commercial, to name a few.

Recommended

Editor’s note: What does it take?

It feels like frivolity to talk about day-to-day issues as the death toll from the devastating Grenfell Tower tragedy continues to rise. My heart breaks for the families who have lost loved ones, and for those whose homes were destroyed in the fire. What they are going through is just unimaginable. The tragedy was made […]

2

Editor’s note: Agency fees cost us all

Every time stats are released on housing transactions or house prices, we receive comments from industry folk calling for a boost in property supply and an improved housing policy to give first-time buyers a better chance. And right they are to call for such things: the lack of affordable property is one of the biggest […]

Editor’s note: A new dawn…

Mortgage Strategy has been coming through your letterboxes on a weekly basis for 16 years and, while that may seem a relatively short period in the grand scheme of things, many big changes and events have occurred within the industry during that time and the title itself has gone through several evolutions. Back in September […]

US: mid-year review and outlook

By Felix Wintle, Manager of the Neptune US Opportunities Fund H1 2014 Economic data: after last year’s strength, economic data has disappointed. Indeed, the economy contracted 2.9 per cent in the first three months of the year — the US economy’s worst performance for five years. However, rather than a symptom of underlying economic weakness or […]

Comments
  • Post a comment
  • Carl McGovern 30th June 2017 at 2:10 pm

    The appetite for lending is certainly still there in the BTL sector. A quick look at the sourcing systems, for example shows a market leading Re Mortgage deal at 2.89% with no arrangement fee, a free valuation, free legal fees and a £250 cashback. The provider of this deal, Accord Mortgage, are a lender I personally would associate with being a touch cautious, so in my view this speaks volumes.

    In addition to the potential tax increases, along with the extra stamp duty payable, a third negative exists, in some cases. This is in the form of the selective licensing, that seems to be coming in to more and more areas. I do wonder if this is just a money making opportunity for the local authorities, or a genuine attempt to improve the quality of available property, in certain areas?