LANDLORDS BLAST ‘PREMATURE’ MEASURES TO CURB BUY-TO-LET

Proposals by the Bank of England to curb buy-to-let lending are premature according to the RLA.

The Bank claims increased buy-to-let lending is now a risk to the economy as a whole and wants to impose new controls, including strict affordability tests taking into account borrowers’ costs and personal income.

It also wants to see lenders take into account potential future interest rate increases and a special underwriting process introduced for ‘portfolio landlords’ with more than four properties. The new measures have gone out for consultation today.

The Residential Landlords Association, whilst agreeing that no landlord should take on debt that they cannot afford, is warning that the proposals are premature given the considerable tax changes being made to the sector which are likely to cool the market.

In February the Treasury Select Committee warned that measures taken to curb buy-to-let could come at a cost to the wider economy given the importance of the sector to supporting and encouraging a flexible labour market.

David Smith, the RLA’s Policy Director said: “The Bank needs to be careful that it does not over-react to the current surge in buy-to-let applications which are aiming to beat the tax increases coming in April. These include a three percentage points extra levy on stamp duty and abolition of mortgage interest relief. It is likely that the impact of these will significantly reduce the demand for borrowing.

“We would urge the Bank to tread carefully and avoid any premature moves that could stifle the supply of the one million rental properties the country desperately needs.”

http://news.rla.org.uk/landlords-blast-curb-buy-to-let/