The last couple of years have seen some major changes in the UK buy to let market. The cost of acquiring property and maintaining a buy to let service has increased dramatically over the last decade. Many people wonder why the government is being so obstructive when there is a shortage of social housing and first-time buyers are struggling to get onto the property ladder. So, is there an ulterior motive behind buy to let regulatory changes?
Reducing the number of landlords
One by-product of these changes could be to reduce the number of landlords across the UK and therefore make the sector easier to manage. There is no doubt that some landlords do push the regulations to limit, and some ignore them, so making this a more exclusive club could make it easier to manage. As we see more changes coming in, one such change being the revamping of Energy Performance Certificates (EPCs), the situation is likely to get worse before it gets better.
Again, when you consider budget constraints across the UK government and local authorities, how on earth are they going to afford to fund future social housing without help from private/corporate investors?
Reduce pressure on house prices
While this subject has not necessarily been discussed in great detail, by making the buy to let market more expensive to operate in this could significantly reduce competition for houses on the market. In the long-term, and it will take a while to kick in, there is a chance that this will bring property prices more within the reach of first-time buyers. At the end of the day this is the kind of long-term move that the UK government needs to bring in now, in order to avert a larger problem further down the line.
The authorities will suggest that they are only trying to protect tenants, and indeed some new regulations have specifically offered protection to tenants, but this does not necessarily stack up.
Political shenanigans
At this moment in time it seems to be the political trend to bash investors and those who have shown any long-term plans for the future. The idea that rents have been pushed higher and higher by the buy to let industry has been peddled heavily by politicians but at the end of the day it is simply a case of supply and demand. The political angle seems to be something of a short-term headline grabbing tactic as opposed to a long-term policy but it has certainly placed buy to let investors in the spotlight and made things very uncomfortable for them.
It will be interesting to see what areas of business life the politicians choose to target next because these things tend to be very cyclical. Only today we have headline grabbing news that Google has paid minimal if any tax to HMRC. However, the planted stories seem to forget the fact that Google is not breaking any laws.
Conclusion
There is a growing consensus that the UK government would rather have a small band of larger landlords up and down the UK. This would allow for easier regulation of the sector and reduce pressure on property prices thereby, in the long-term, hopefully bringing prices back within the reach of first-time buyers. This is a long-term situation because as we know the UK is literally hundreds of thousands of new builds behind the curve. How did we ever get into this situation?