Buy-to-let mortgage provider Paragon has praised the findings of the Communities and Local Government Select Committee’s report on ‘Financing of New Housing Supply’.
The cross-party committee reported on the need to simplify tax and regulation on landlords, proposing that Government allow pension funds to invest in the building of new homes in the private and social rented sectors.
It also recommends that real estate investment trusts should be ‘revamped to encourage investment in housing’.
Nigel Terrington, chief executive at Paragon, provided evidence to the select committee and welcomed the overall findings, but warned that the impact on current landlords needed to be looked at in greater detail.
“We are broadly pleased with the recommendations made in the report. That said there is not enough recognition of the essential role played by the private landlord and the contribution they make in providing homes for millions of people in the UK.
“A great deal of effort goes into policy development around expanding the scale of corporate and institutional investment. However, not enough thought has been given to how we expand and motivate the model which already works in terms of the private landlord.”
The British Property Federation told the committee that ‘probably the most significant source of private sector investment in housing over the past decade has come from small investors buying standalone property’.
The report added that while attracting larger investments is a target, the government must remember that ‘the sector is, and will continue to be, dominated by small companies and individual landlords’.
Paragon stated that the turbulent financial climate had affected availability of mortgage finance, with no recovery as yet.
“Buy-to-let was significantly affected by the credit crunch with an 81% decrease in the value of new loans, and the number of buy-to-let products declining by 90% from July 2007.
“Although buy-to-let lending has entered a period of recovery, it remains difficult for private landlords to access finance for property purchases, thus contributing to the current market dysfunction.”
Terrington told the committee in December that any new policy would need to meet the needs of both current landlords and tenants.
“The kind of properties that institutional investors are likely to invest in through ‘build-to-let’ schemes, such as two-bedroom flats, in large purpose-built developments are unattractive to tenants and there is already an over-supply of this type of property.”
He now adds “Private landlords have demonstrated over many years their willingness to expand the supply of rented property. We need policy developments that work with private landlords, not ones that get in their way.”
