Given the affordability problems facing many would-be home buyers in the housing market, it is only natural that people are looking to remedy perceived ills and create a more inclusive marketplace. However, landlords and the buy-to-let sector are not the primary cause of the market’s problems – and cracking down on them will unfortunately not provide the shot in the arm that many hope for.
While the buy-to-let sector has expanded relatively rapidly in recent quarters, the number of mortgages advanced is still at a far lower level than its pre-recession peak. Figures from the Council of Mortgage Lenders (CML) show that while the number of loans made in the sector increased from 90,000 in 2009 to 200,000 last year, they still remain significantly below the 350,000 made in 2007.
At the same time, the private rental sector continues to grow at an enormous pace. According to a report from PWC, the private rental sector has doubled in size from 2001, and is set to include an additional 1.8 million households by 2025. It is therefore important that buy-to-let lending is able to support landlords, who will be needed to provide high-quality rental accommodation.
Critics of the sector are quick to suggest that the growth in demand for private rental accommodation is a result of buy-to-let investors pricing aspiring homeowners out of the market. However, the facts simply don’t support the idea that the buy-to-let sector is displacing these groups, with purchases made by the first-time buyers standing three times higher than those by landlords.
Ultimately the lack of options available for would-be home buyers comes down a failure to build enough houses to meet public demand, and rectifying this should be the number one priority within housing policy.
While clamping down on landlords may seem like a quick-fix way to boost homeownership, the reality is that this won’t address the market’s structural problems, and would further strain a social housing sector already verging on breaking point.
Peter Williams is executive director of IMLA
