The head of mortgage broker trade body the Association of Mortgage Intermediaries (AMI), said that lending controls on buy to let would not have any real traction in the Private Rented Sector, with the majority of deals in the market going through as cash purchases.
George Osborne confirmed at a Treasury Select Committee meeting held last month that the Bank of England’s FPC will be granted the ability to place controls on buy-to-let lending ‘as soon as possible’.
In his July Budget, Osborne made the surprise announcement that the higher rate of tax relief for buy-to-let investors would be cut by April 2020 from 45% and 40% to a maximum of 20%.
Speaking at The Mortgage and Protection Event in Warwick, Sinclair (pictured) said: “Tax changes on buy to let will have more impact over the next four years than anything that’s occurring on a regulatory basis.
“Whether the FPC decides to do anything or not, the fact of the matter is that two-thirds of the transactions that take place in the buy-to-let market are actually cash transactions, only a third have got lending against them. Therefore anything the FPC does in terms of placing lending controls will have a very limited impact on house price inflation.”
Sinclair’s comments echo those made during a recent conference held by Mortgage Brain, where the trade body boss said that the FPC will ultimately fail to control buy-to-let property price inflation.
He said: “Anyone who wants to try and control property price inflation in the buy-to-let market is frankly crazy. They [Bank of England] might try but they will fail in the same way they have put caps on lenders’ loan-to-income lending and it has made no difference to house price inflation. The thing that has changed the residential market is Stamp Duty; it is taxation changes that drive the market, not when you start playing around with how lenders can lend.”
