Evidence of a sustained increase in buy-to-let lending were seen in the Council of Mortgage Lenders’ Q3 figures - volumes and values were up on a quarter-on-quarter and year-on-year basis - suggesting that tax changes have had a limited impact so far. Projections indicate that buy-to-let borrowing will continue to outperform other investments: every £1 invested in buy-to-let, with a 25% deposit, is forecast to return £2.87 over the next decade, and for cash buyers, £1 invested in buy-to-let today is forecast to be worth £1.81 in 2024. The issue nevertheless remains a concern, with buy-to-let tax relief seen as a major reason why half of all landlords are currently looking to sell, according to a survey by estate agent Your Move and letting agent Reeds Rains. As yet, we at Aldermore have seen little to no change.

Historically, buy-to-let has proved an extremely valuable investment, with one study estimating that every £1 put into buy-to-let in 1996 is now worth £15 – outperforming cash, bonds and shares. Although prospects for the sector remain positive, almost one in ten (9%) landlords believe that now is a good time to sell up. While this rental capacity would, over time, level out, if a tenth of all landlords were to leave the industry, it would have a significant impact on the number of properties available for tenants. Elsewhere, nearly one-quarter (24%) of the landlords said legislation on letting has become more confusing and the introduction of the Mortgage Credit Directive next March is likely to affect the market in the short term.

Recently, the Chancellor announced new powers for the Financial Policy Committee to deal with the buy-to-let market, and while new policy scrutiny to help improve the private rented sector is welcome, it is important that care is taken not to jeopardise the buy-to-let market at a time when levels of uncertainty appear heightened.
 
With 44% of landlords saying that investing in buy-to-let property is more complicated than it was six months ago, it is important that a dialogue is kept open between the Financial Policy Committee and those in the buy-to-let sector.
This would avoid unnecessarily removing any momentum in the private rented market. In addition, these changes mean that there is an added responsibility for lenders and brokers to ensure that their customers are kept up to date and given the best possible advice on how to manage their portfolios.

Policy evolution within the housing market is necessary and essential to help the industry function in the best interests of both lenders and customers alike - and the buy-to-let market is no exception. Data from the Department for Communities and Local Government predicts that, by 2032, more than one in three properties will be owned by private landlords. The private rented sector will continue to be a vital component of the UK housing market and policy levers must be carefully used to support the sector as a whole.

Attributed to Charles Haresnape, Group Mananging Director, Mortgages, Aldermore