Recent CML data for May shows that lending to landlords jumped 22 per cent compared to 12 months ago. 19,100 buy-to-let loans were handed out in May with a collective value of £2.7billion.
This year, buy-to-let lending has accounted for more than 15 per cent of mortgages taken out.
The private rental sector is an integral part of the housing market and the role landlords play in driving growth and supply is vital. Investor activity from Britain’s two-million strong army of private landlords is essential to underpin the construction finance.
David Thomas, the new chief executive of Barratt Homes, said 10pc of the housebuilder’s completions were bought by buy-to-let investors, and data from the Department of Communities and Local Government shows that 57pc of the increase in housing stock between 1986 and 2012 was accounted for by private rented accommodation, which demonstrates the importance of the small, private landlord to the UK’s housing supply.
The Chancellor's recent announcement in the Summer Budget concerning the lowering of tax relief on buy-to-let mortgage interest is unwelcome news for some landlords.
Although it is early days, our belief is that any impact will be marginal and that property remains a very attractive investment opportunity. Potential investors taking a long-term view will continue to compare returns on various investment classes and property has historically performed extremely well.
Rented households made up 35 per cent of households in England and Wales in 2013/14 (up from 31 per cent in 2001) according to ONS figures. Demand from tenants is expected to remain high for the foreseeable future and landlords are likely to continue to see the benefits of making further investments in the sector despite these changes to the tax regime.
While the changes may make some people think twice, figures from the Government suggest that by 2032 more than one in three properties will be owned by private landlords. Therefore we believe it is unlikely that there will be a significant decrease in the number of people considering property as an investment.
