The growing pressure being brought to bear on the buy-to-let market could backfire if it adds to the housing gap, said Phil Rickards of Lloyds Banking Group at yesterday’s FSE Cardiff panel debate.
Talking about the variety of changes that will impact on the sector, lenders and landlords, Rickards said there was a danger of going too far. “We need to be careful how much pressure is being placed on the housing market,” he said. “This could impact a lot on the private rental sector, and we’ve already seen the decline in social housing. We could be leaving people with nowhere to live.”
Rickards also added that he believed the buy-to-let market was “not one that’s out of control”.
Ian Andrew of Nationwide Building Society said the PRA consultation on underwriting standards in the buy-to-let sector – due to be published shortly – would have a major impact on buy-to-let lending. “We’ve seen a tightening of criteria and a tightening of stress rates which is already resulting in a drop in case numbers,” he said. “After the consultation period every lender that hasn’t already moved, will have to move. This will create buy-to-let mortgage prisoners – some of them will find it difficult to remortgage.”
John Coffield of Paradigm Mortgage Services said he was confused by the government’s continued focus on the private rental sector. “It’s odd because we see the PRS as part of the solution, not part of the problem,” he said. “I think lenders need to send out clear messages to brokers about helping them through this maze.”
In terms of the growing interest in limited company buy-to-let lending as more borrowers seek to house their portfolios, and new purchases, within structured vehicles, the two mainstream lender representatives were asked about their plans in this area.
“It’s something we’re still looking at,” said Andrew. “It’s very capital intensive for us and we have nothing planned at the moment.”
Rickards said: “We’re definitely looking at it but we want to do it in the right way. To be honest we’ve been distracted by the PRA consultation and we have to prioritise our work streams.”
