IMLA has called on the Government to extend the Help to Buy mortgage guarantee scheme beyond 2016 and to ease capital requirements on lenders that use the facility.
In a report today, The Intermediary Mortgage Lenders’ Association says loans made under the Help to Buy guarantee scheme should be given more generous capital relief, but instead they are currently treated like a securitisation.
It says: “A straightforward substitution of a tranche of mortgage risk for government risk when the government guarantees that mortgage tranche is completely justified.
“By comparison, treating each loan as a securitisation is unnecessarily complex and provides a less appropriate risk weight.
The report continues: “The Help to Buy guarantee scheme could then be continued as a mechanism to counteract the high (and potentially rising) capital requirements for high LTV lending.”
IMLA also slams Government housing policy, claiming that ministers have resigned themselves to only addressing the demand side of the market and are not doing enough to stimulate supply.
It says there have been too many “unpredictable shifts in policy” which is jeopardising long-term investment in bricks and mortar.
It says: “New taxes on buy-to-let and second homeowners amounted to a tacit admission by government that the previous policy of stimulating supply as the primary policy measure had failed to address the housing shortage.
“Instead government is now set on a path of managing demand, as well as trying to stimulate supply, to meet its over-riding policy objection of sustaining owner-occupation.”
However, the report warns that buy-to-let taxes have been “ruinous” for some landlords and that, according to the Institute for Fiscal Studies, rental housing looks set to become the most tax-disadvantaged asset class. IMLA warns that costs will be passed on to tenants.