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Mixed messages on contrasting support for new build and buy to let – e.Surv

by: Richard Sexton, director of business development at e.Surv
  • 18/04/2016
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Mixed messages on contrasting support for new build and buy to let – e.Surv
Buy-to-let has undoubtedly come under attack in the past year or so, but why has this treatment not filtered through to the new-build market?

After avoiding fuller regulation for many years, the buy-to-let sector has now had more than its fair share of government and regulatory intervention. April heralded the much trailed Stamp Duty hike for buy-to-let purchases, and the Bank of England is now calling for lenders to carry out more stringent tests on buy-to-let applications to help prevent overheating in the market.

Lenders have proactively responded to the limited opportunities to make margin in a persistently low interest rate and ‘vanilla’ environment by innovating and actively seeking out niche areas such as buy to let. These lenders must be more than frustrated that attempts to support the sector are apparently not seen positively in all quarters.

On this basis, new build, another area of growing common interest among lenders, might also expect to come under scrutiny and control. However, the reality is that government intervention in this sector has been almost diametrically opposite, with a number of schemes to support growth, at least up until 2020. Both the new-build and buy-to-let sectors suffered disproportionately in the last downturn, so this difference in approach is puzzling – particularly as arguably both support the recognised demand for first-time households. Mixed messages indeed for lenders.

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