60 Seconds with…

Paul Howard
Head of Corporate Accounts
Nationwide Building Society

With first-time buyers finding it hard to get on the housing ladder, what impact will this have on the buy-to-let market?
It’s putting more demand on the private rental sector and we are seeing lenders make their products more attractive in response. The Mortgage Works recently introduced 80% LTV deals, which was enthusiastically received by the market.

Will LTVs rise further?
I don’t think so – at least, not for a while. We’ve probably already surprised a few people by moving to 80% LTV. Readers will know that we are a pretty cautious creature in buy-to-let but we thought it was the right time to do this. It’s a shot in the arm for the housing market and the intermediary sector too. I think we will see a general easing of criteria but not go back to some of the outrageous things seen in the market back in 2007.

Research from Datamonitor shows that TMW and BM Solutions did the bulk of buy-to-let business last year, so has lack of competition been a concern ?
Not at all. We’ve always been clear about the direction in which we want to steer our business and as a result we have a buy-to-let book that’s performed exceptionally well throughout the economic cycle. The model is thoroughly tested and we’ve been able to fulfil our lending ambitions. So we’ve had some challenges but overall, this has been a good period for us.

With the likes of Kensington, Precise Mortgages and Aldermore getting into buy-to-let lending, is this is a sign of growing confidence in the sector?
Yes, the sector has performed well as seen in recent Council of Mortgage Lenders arrears statistics. And the Association of Residential Lettings Agents says yields are increasing too. Margins are good and credit standards are tighter than they have been recently from a lending perspective so it’s an attractive proposition. But of course, any prospective lender still has to get funding which isn’t easy.

What impact will Capital Gains Tax changes have?
They could have some negative effects – it depends whether people are looking to acquire property for capital growth or for income opportunities. It’s probably usually a mixture of the two.

That said, there are several factors in play that outweigh the negatives of CGT changes. Low interest rates make buy-to-let an attractive proposition, house prices have stabilised and there is increasing demand for rental properties. These positive factors will outweigh the downsides of any changes to CGT.