Dramatic slump in buy-to-let lending blamed on Government intervention

Regulatory intervention has led to a huge 80% slump in buy-to-let investment.

That’s according to the Intermediary Mortgage Lenders Association (IMLA), which has charted a steep drop from £25bn of net investment in the sector in 2015 to just £5bn last year.

IMLA said tax changes had deterred landlords from investing and created difficulties re-mortgaging.

It warned that a period of policy consolidation was needed to assess the impact of recent changes before any further “punitive action” is contemplated.

It added that buy-to-let had had a positive effect on the PRS, estimating that between 2000 and 2017, UK buy-to-let landlords invested £289bn into the sector, meeting rising tenant demand by bringing 1.8 million properties into the rental market.

At the same time, real rents have fallen 4.4% across the UK, it claimed.

However, new tax and regulatory measures introduced in the last two years, such as a 3% Stamp Duty surcharge and the removal of mortgage interest tax relief, have deterred some landlords from expanding their portfolios and prompted others to abandon the market,.

Kate Davies, executive director at IMLA, said: “The raft of regulatory and tax changes that have hit the buy-to-let market in the last year have far-reaching effects that are still yet to be fully realised.

“We know that the majority of people regard owner-occupation as the tenure of choice, but for many this is not an immediate option. We also know that those who would in the past have rented from their local authority or housing association now need to rent privately.

“Various interventions by Government have apparently been aimed at encouraging more first-time buyers and making investment in buy-to-let less attractive to existing and potential landlords.

“But the PRS plays a vital role in our housing supply and it’s essential that a sensible balance is struck, if tenants are not to be disadvantaged by shrinking stock and higher rents.

“We urge the Government to reassess the impact of the recent far-reaching regulatory changes to buy-to-let investment and allow a period of policy consolidation.

“Our nation’s PRS investors provide a vital service that’s vital to millions of UK tenants. We need to support and protect a sector that does so much for so many.”

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  1. JMK

    The Council’s are already panicking as the tidal wave of new homelessness hits them.  Emergency accommodation costs are going through the roof and heading for the stars.  Is this how our Council tax should be spent??  The best thing Theresa May did was to sack Osborne but she has yet to repeal the madness he left behind him.

  2. David Cantell

    Well said Kate, the government being tinker tailor soldier spy


  3. Mark Connelly

    Osbourne was warned but didn’t care. He had an agenda. The madness as eluded to by JMK is that Hammond has not reversed these massively destructive policies. I don’t think that the market can wait for build to rent to ride to the rescue.

    Just an observation, but the irony is not lost on me that had it not been for Osbornes pandering to the corporate build to rent sector then we would still have a PRS. Now we need them to ride in like some white knight to save the day having helped create the mess in the first place.

  4. NWood95

    We manage a portfolio of 420 properties. Most of our BTL landlords have a single property.

    As tenants vacate, rather then re let we are now asked to value the properties for sale. Last quarter we sold 13 BTL Properties, in January 2018 we have a further 7 moving from BTL to sale.

    We have the largest Lettings stock in our area, I am sure more will follow as S24 takes hold.

    1. eltell

      We also manage a large portfolio around double that of Nwood95 and can report a similar percentage of private homes being sold when tenanta vacate.  Osbornes Law is now having a major effect in reducing the PRS in my view.

  5. P-Daddy

    This is one of the policies introduced as a knee jerk to help the outraged of Daily Mail/Express world and of course the angry of the internet. It was veneered as being aimed at the rich. Until the same groups wake up and see the real life chaos being caused and reverse the damage nothing will change…but that’s not going to happen whilst May et al are in the bunker ducking Brexit brickbats….

  6. Penguin

    NWood95 is spot on.

    We, too, are seeing longstanding BTL landlords deciding to sell as tenancies end.

    We sold 9 last year and currently have another 15 for sale.

    Osborne was a lunatic and has only exacerbated the current housing crisis. When will the Government wake up to the fact and repeal his ludicrous tax changes?

  7. WinstonSmith86

    Great news! This means more ex-BTL properties can be sold to first time buyers. Unless landlords are actually building new homes and increasing stock in the rental market, they simply remove one potential owner occupier home and make it into a rental. This was a good move from the Government and looks like it is taking ex-tenants out of the PRS and making them home owners who will vote Tory. Win-win for all!

    1. Mark Connelly

      Winston, I can’t make up my mind if you are just being incredibly naïve . Or trolling. I suspect the latter because no one over the age of four who is involved in property would endorse your logic. Sorry, maybe Corbyn would.

    2. Home Provider

      Some landlords who used to increase the stock have stopped doing so because of Osborne’s tax on mortgage interest.  So his lunatic policy has deterred an increase in housing supply that would otherwise have occurred.
      In order to be able to pay the extra tax, some landlords have increased the rents of tenants who had not had an increase in years.  Tenants on benefits cannot afford the increases and are being evicted.
      It may look to someone who is ignorant of the facts like it is taking ex-tenants out of the PRS and making them home owners but in fact it is taking the poorest ex-tenants out of the PRS and making them homeless.

      1. Deltic2130

        Yes Winston, all the tenants being evicted are all queuing up to be willing house buyers. Especially all those on benefit. Which is presumably why homelessness is being solved and the numbers in temporary accomodation are shrinking fast.



  8. NWood95

    An interesting comment by WinstonSmith86.


    In Halifax where we operate, assuming £150 000 is a fair price for the FTB market, we have the following on Rightmove this evening

    HX1, 149 houses for sale under £150 000. There are 98 available to rent.

    HX2, 122 houses for sale under £150 000. There are 45 available to rent.

    HX3, 133 houses for sale under £150 000. There are 87 available to rent.

    So just in the first 3 postcodes, 404 houses under £150 000 available to buy for first time buyers. 230 rentals available.


    There are a lot of people who either have to, or prefer to, rent property. The days of living in a town and working for a business for 40 years are gone. We have a much more fluid workforce and the PRS is needed to service this need.

    Section 24. Landlords exit – as per my earlier post. Supply down. Demand up. Rents up. Tenants pay the price. Just my opinion.

  9. FTB-UK05

    This is a Great News for all the FIRST TIME BUYERS. Sales have really really  gone down from last 6 to 8 months. House prices are down in Middlesex and other surrounding areas in London by 10 % plus. This is giving opportunity to FTB.

    I hope from next financial year HMRC will tighten the loop holes of all the BTL Landlords. We have already received letter from HMRC to disclose all the Properties and Landlords names of BTL owners. They have asked the ESTATE AGENTS (us) to disclose the rent transferred details of all the Landlords from last 6 (Six) years .

    Very Good move from HMRC, as we have seen lots of Tax Avoidence from these landlords. We have been getting. This news that the Sale prices of properties will further go down by 10% to 15 % by 2020.

    BUY TO LET and LET TO BUY Mortgage Industry should be REGULATED. As these landlords have been given easy mortgages by  UN- REGULATED Industry.

    All these BTL mortgages should only be for a maximum of 2 (TWO) years. The BTL Mortgages A/c  should be reviewed after every 2 years by Lenders. They should also stop giving Free stuff in BTL mortgages.

    This will encourage the FIRST TIME BUYERS MARKET and Lower the Property Prices too, in longer term.


    1. NWood95

      How much is a 3 bed semi detached in Middlesex?

      I’ve just a had a look on RM. I can’t find one under 150k in Middlesex.

      We have plenty of affordable 3 bed semi detached under £150k for the FTB in Yorkshire.

      So yes, s24 good in the affluent south east as prices are ridiculously high. Housing  supply will increase as LL exit and if you are lucky prices drop for the FTB which is what you want?

      Up here we have affordable housing so the problem remains, our tenants will suffer as LL exit.



    2. JMK

      So you think that with  property prices dropping lenders are going to be falling over themselves to give FTBs loans???  Do you actually understand the market?  Good grief it’s hard enough to get a mortgage now, let alone when prices drop!  And property prices falling usually goes hand-in-hand with a downturn or recession.  So…. the lenders will be even more wary about taking on FTBs when they could lose their jobs at any time.  Sorry but the rest of us operate in the real world.

  10. Bashful100076

    WinstonSmith and FTB-UK05. This another case where the wrong people are being blamed for what the government have got wrong.

    It comes down to reactionary policy making. After the financial crash, the banks were told to apply more stringent affordability criteria to lending.

    They have taken this and, now apply no common sense at all to their decision making.

    It’s not a case of all the  BTL landlords taking up all the housing stock. That’s a crazy premise. There are plenty of properties out there. It’s because the banks won’t lend.

    They look at a person’s circumstances and they come to the conclusion that they can’t afford a £500 interest only or a £900 repayment mortgage while ignoring the fact that they are paying £1400 in rent on a property that’s valued exactly the same as the one they want to buy.

    This is the same logic that one lender says you can’t afford to move your mortgage to our great 1.2% product ignoring the fact that you’re already on a 3.9% rate and gave been paying that for years.


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