Mortgages

Buy-to-let investment plummets 80% since 2015

Net investment in buy-to-let property has fallen by 80% from £25 billion in 2015 to just £5 billion in 2017 due to "excessive regulatory intervention on the sector", according to research from the Intermediary Mortgage Lenders Association.

Rozi Jones
|
7th February 2018
BTL buy to let sign
"We urge the government to reassess the impact of the recent far-reaching regulatory changes to buy-to-let investment and allow a period of policy consolidation. "

Net investment in buy-to-let property has fallen by 80% from £25 billion in 2015 to just £5 billion in 2017 due to "excessive regulatory intervention on the sector", according to research from the Intermediary Mortgage Lenders Association.

The 80% slump is a steeper fall than after the financial crisis, sparking IMLA to call for a brake to be placed on further policy interventions on the UK’s PRS.

The report notes the positive effect that buy-to-let has had on the PRS. It estimates that between 2000 and 2017, UK buy-to-let landlords invested £289 billion into the sector, meeting rising tenant demand by bringing 1.8 million properties into the rental market. At the same time, its data shows that real rents have fallen 4.4% across the UK.

However, IMLA reports that new tax and regulatory measures introduced in the last two years, such as the 3% stamp duty surcharge and the removal of mortgage interest tax relief, have deterred some landlords from expanding their portfolios and prompted others to exit the market.

As a result of tax changes, more than a fifth (21%) of landlords have indicated that they plan to reduce the size of their portfolios.

Kate Davies, Executive Director at IMLA, commented: “The raft of regulatory and tax changes that have hit the buy-to-let market in the last year have far-reaching effects that are still yet to be fully realised.

“We know that the majority of people regard owner-occupation as the tenure of choice, but for many this is not an immediate option. We also know that those who would in the past have rented from their local authority or Housing Association now need to rent privately.

“Various interventions by Government have apparently been aimed at encouraging more first-time buyers and making investment in buy-to-let less attractive to existing and potential landlords. But the PRS plays a vital role in our housing supply and it’s essential that a sensible balance is struck, if tenants are not to be disadvantaged by shrinking stock and higher rents.

“We urge the government to reassess the impact of the recent far-reaching regulatory changes to buy-to-let investment and allow a period of policy consolidation. Our nation’s PRS investors provide a vital service that’s vital to millions of UK tenants. We need to support and protect a sector that does so much for so many.”

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