Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
This government has finally turned decisively against the private landlord in favour of the first time buyer. Whilst the various purchase assistance schemes which speckled the last government culminating in two flavours of Help to Buy provided welcome support to get people on the housing ladder and got the market moving, it has clearly not been enough.
The strong support that this provided to assist purchasers has got the market moving. So what has created the need for a significant double whammy. There has been a long term trend away from owning a property with a mortgage that may have spooked the tacticians in Tory central office.
The recent income tax changes by adding all private buy to let receipts to income and reducing any deductible costs to the basic rate of tax is a significant change to the immediate returns a small landlord can make.
The decision to double this up with the recently proposed 3% Stamp Duty hike underlines a real change in focus. The income tax changes had already started a debate about whether landlords needed to move to limited company structures. The move to impact landlords with less than 15 properties with a 3% surcharge on purchase gives the first time buyer a real edge for the first time in a long time.
With the Financial Policy Committee mood music set upon controls on Loan To Value or Loan To Income on Buy To Let lending products then we are seeing a clear need for more up front capital from the smaller landlord. This move to remove residential property from being the investment asset class of choice for many looms large. It is clear that there is a desire to move individual pension investments back to more traditional products. The full impact on the Buy To Let market is yet to be seen, as is the potential for a fall in house prices as a result.