The importance of a healthy buy-to-let sector
Tony Ward is chief executive of Clayton Euro Risk
A couple of weeks ago I wrote a blog about how I believed that the buy-to-let sector would grow over the next few years, due in part to a new wave of amateur landlords given that reforms in retirement pots mean that pensioners could take the opportunity to invest cash in property.
I also suggested that I was pleased that the government was taking an interest in this market and that some degree of universal light touch regulation in the near future would be a positive step.
That was a few days before the Budget in which George Osborne announced he would restrict mortgage interest relief for buy-to let-landlords to the basic rate of tax (20%) in a move that will be phased over four years from 2017.
Hardly the light touch I had in mind.
I therefore agree with the CML which has warned the government against inadvertently maligning the buy-to-let sector and its contribution to the private rental market.
This comes at a time where research suggests that private tenants are shelling out some half of their take-home pay on rent, according to the English Housing Survey, handing over an average £704 a month. Contrastingly, the survey found that mortgage holders, who tend to have higher incomes, typically pay £612 a month.
This works out at just 19% of their salary.
Roger Harding, director of communications, policy and campaigns at Shelter, said: “As these new figures starkly show, private renters are bearing the brunt of our dramatic housing shortage.”
We will continue to need to provide housing for the rental sector. Therefore having a quality buy-to-let sector will help, in part, deliver the supply that is required to assist this market.
This should ensure that rents don’t get out of control and are an affordable alternative.
As Paul Smee, the CML’s director general said: “It’s important that the main focus of the housing narrative remains on the crucial issue of housing supply.”