Bob Young is managing director of CHL Mortgages
The mainstream media’s portrayal of the buy-to-let market is often, shall we say, hysterical and a quick search amongst recent articles on the topic will only reinforce this view.
Within one single paper we can verge, without any sense of self-knowledge, from buy-to-let being the source of all evil and single-handedly responsible for (take your pick) a) increased house prices, b) the lack of first-time buyers, and c) England’s failure to win the World Cup since 1966, to another article which suggests now is the time for individuals to become landlords using property as their pension because the market is so buoyant.
I give you exhibit A, a recent article in The Daily Express entitled, ‘Is the buy-to-let bubble about to burst?’, while another piece in the FT opined that ‘Buy-to-let not Help to Buy is the real scourge of Generation Rent’. A week later the Express ran a piece which offered advice to potential new landlords headlined ‘Thinking of buy-to-let?’ If the so-called buy-to-let bubble is bursting why is it suggesting its readers put their hard-earned cash into property?
There is little point getting wound-up by such coverage because I fully understand that different journalists and publications view the buy-to-let market differently, howeve,r it would be beneficial to all if opinion was backed up by fact. In too many cases there is a simple assumption that the growth in buy-to-let has been solely responsible for the fall in first-time buyers numbers and therefore the sector should be curbed, held to account, and if necessary all participants should be hung, drawn and quartered.
This first-time buyer good, buy-to-let landlord bad mentality does not help solve the very serious issues facing the UK housing market as a whole and rides roughshod over the fact that without a strong private rental sector the whole picture would look even more of a mess. To suggest, as many do, that the lack of high LTV mortgage products over the past five or so years is the fault of buy-to-let lenders and those borrowers who have taken out such products is simply absurd. Indeed, look back pre-credit crunch at a time when high LTV products for residential borrowers were in abundant supply and you will still find a very healthy buy-to-let marketplace.
One writer on buy-to-let suggested that the popularity of investing in property and becoming a landlord was solely down to the tax incentives that come with it. Curb these, she wrote, and you will find plenty more properties which would have been snapped up by landlords now freely available to be bought by first-time buyers. This is clearly nonsense on a number of levels – few landlords will be involved in buy-to-let simply because they can offset their interest payments against tax. If they are then I suspect they are not really looking at the long-term. Secondly, just because a landlord doesn’t buy a property does not automatically mean a first-time buyer is going to be able to purchase it or would actually want to. This is not an either or marketplace.
We therefore need to approach the housing sector not as a series of competitions between sectors or participants in which only one group can ever prevail at the expense of the other, but as one where there is space for all. There needs to be joined-up thinking at all levels to ensure there are opportunities for both first-timers or landlords or second-steppers or those wanting to let-to-buy. In effect every single individual who wants to purchase should not be excluded simply because they do not fit a traditional view of who ‘deserves’ to own property. These so-called norms no longer exist and it is important not to view the market as it was 30 to 40 years ago but what it is today and the future to come.