x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

Buy-to-let market set to stabilise by 2021

There will be a continued dampening of the buy-to-let sector over the next three years, before the market stabilises in 2021 and returns to growth in the following two years. That’s according to a new analysis of the market produced by Shawbrook Bank.

The ‘UK Buy to Let’ report, put together by Shawbrook Bank and compiled by the Centre for Economics and Business Research (CEBR), forecasts buy-to-let market activity up to 2023 and compares this projection with a scenario in which the government’s various policy interventions of recent years – mortgage interest tax relief, extra stamp duty land tax and a tightening of PRA underwriting standards - were not implemented.

The research showed a distinct change in buy-to-let activity following government intervention. In 2016, when the additional 3% stamp duty surcharge was introduced, the number of buy-to-let mortgage approvals for house purchases fell by 13%. This was followed by an even steeper decline of 27% in 2017 as the sector adjusted to the introduction of mortgage interest tax relief changes.

The report predicts this transformation will continue until 2021, but will be less stark than the market has experienceMd in recent years. Strong demand in the private rented sector and a ‘core’ of professional landlords is countering the effects of the changes. As a result, from 2021 moderate growth in the buy-to-let market is anticipated for the years leading up to 2023.

Under the no-reform scenario, meanwhile, Shawbrook Bank would have expected the share of buy-to-let mortgages to have stayed higher for longer, averaging at about 13% between 2018 and 2023, in comparison to 7% under the new scenario analysis. What’s more, the research estimates that 360,000 more buy-to-let mortgages would have been issued if the changes to the tax system and underwriting process had not happened.

“Whilst the series of government and regulatory changes have had a significant impact on the sector, we have seen the impact felt more heavily amongst the “amateur” landlord community which has presented growth opportunities for professional investors,” Karen Bennett, ‎managing director at Commercial Mortgages, said of the findings.

“Recent political turbulence has had an amplifying effect on investor confidence but positively, the market remains buoyant for those with a long-term strategy who draw upon specialist advice to fully understand the impact of these policy shifts,” she added.

“Regulatory change that supports the public interest is not something to be afraid of, and we predict that this high performing asset class will remain a fundamental strength over the long-term provided lenders continue to adapt and change alongside it.”

icon

Please login to comment

valpal
submit
sign up