30th
Dec 2016
There is growing trepidation amongst landlords that the Bank of England could impose further restrictions and costs in 2017.
In spite of the reduction of buy-to-let mortgages activity in the last three quarters of 2016, the Bank of England seemingly has no intention of easing up on its measures to curb the market.
The Bank of England has said in its latest Financial Policy Committee meeting's record: “Given the risk outlook, it was not the time to loosen standards and expose the economy to a potential amplification by households of shocks to economic activity.
“[The FPC] agreed to conduct a broader review in 2017 of its overall strategy for setting policy measures to guard against risks stemming from the owner-occupier and buy-to-let (BTL) mortgage markets.”
The Bank has been given more powers by the government to impose further measures to restrict buy-to-let loans given by banks by the value of the property in question.
The new Stamp Duty increase, 'wear and tear' and mortgage interest tax allowances for private landlords being reduced and the Prudential Regulation Authority's dictate to banks to become increasingly prudent, could make 2017 a miserable year for landlords.
The industry hopes that all of these measures will convince officials not to clamp down any further on landlords.
Jeremy Duncombe of a mortgage brokerage, said: “We don’t feel there is any need for further interference or sanctions in the BTL market, even before the PRA changes come in 2017, the market has already felt the impact, and there is more to come.
“Purchase business in BTL is down significantly, and the business that is driving lending currently is remortgages which don’t affect the market. We wouldn't want to see further involvement in changes in the market.”
Ed Stansfield, chief property economist at a leading economic research company, feels that regulators should not be concerned that property investors will leave the market, which could cause prices downwards.
Stansfield said: “Their fear is that BTL owners are somehow less invested in the market than a homeowner, and if things go wrong they are more like to cut their losses, flooding the market with properties which would drive down prices and cause problems in the banking sector.
“While you can see the intuitive logic, all the evidence flies in the face of that - the lending stock of BTL mortgages continued to rise through the depths of the financial crisis.”
He believes that landlords will benefit from a robust housing market with rising prices and in a stable economy the asset will still yield rental income, which is encouraging to investors.
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