Half-way through the year, if you had pressed me on what was likely to be the stellar mortgage market sector, come the end of 2015, I would probably have been drawn towards buy-to-let.
At the time, it appeared that the private rental sector had dodged a bullet with the return of a Conservative Government and buy-to-let stakeholders were probably thinking there were no big changes on the way.
Six months on, however, and we appear to be a long way from this view, politically at least. While buy-to-let has continued to grow and develop during the second half of the year, the Government appears intent on cutting off that growth and shifting the housing balance in favour of home-ownership at the expense of investors.
It will be clear to most that there are likely to be significant consequences for the buy-to-let sector, not just from the recent 3 per cent increase in stamp duty but also the tax relief changes, the earlier payment of CGT, taxation being judged on rental income rather than pre-tax profit – the list goes on. And in Scotland of course there will be the introduction of rental caps and the like if the Scottish Government has its way.
Add on top of this the powers that the Financial Policy Committee has been given which would further put the dampeners on buy-to-let lending activity and we may well be looking at a very different sector in 2016.
That said, investment in property will still have its attractions however whether it will be so enamoured by the smaller landlord remains to be seen. While there is much talk of landlords bringing forward their purchases in order to beat the stamp duty hike, I also suspect a fair number will be weighing up a decision to exit the sector completely.
The Government clearly wants to move buy-to-let more into the realms of the full-time professional and the corporate landlord – hence the decision to exempt them from the stamp duty rise – so advisers (and clients) need to be fully informed about the potential positives and negatives that can now come from purchasing an investment property.
There are many issues to consider and, one thing is safe to say, this is not the Christmas present the sector wanted.
Richard Adams is managing director of Stonebridge Group