She said the government should encourage landlords to buy stock which is uninhabitable or build new stock specifically for renters to ease the UK’s housing woes.
Property analyst Kate Falkner has accused the Treasury of being 'naïve' in promoting build to rent as a replacement for falling buy-to-let demand.
Instead she said the government should encourage landlords to buy stock which is uninhabitable or build new stock specifically for renters to ease the UK’s housing woes.
However she added that regulators haven’t got everything wrong, as she reckoned the Financial Conduct Authority was correct in saying “some lenders are applying standards that are somewhat weaker than those prevailing in the market as a whole”.
Faulkner said: “The Treasury cannot be naive enough to think that their support of build to rent, albeit a good policy aimed at large institutional landlords, will fill the gap missed by a fall in demand for buy-to-let lending.
“What they should be doing is encouraging landlords to buy stock which is uninhabitable or build new stock specifically for renters, a kind of ‘mini build to rent’.
“This would help to solve the underlying stock problem and protect the financial sector more, rather than just transfer problems of stock shortages from one tenure to another.”
She added: “I do think that there is a complete misunderstanding about the influence buy-to-let has on house prices.
“This ‘horse has bolted’ in my view from a bubble perspective. Just take a look at city centre flat prices in areas like Nottingham, Birmingham, Leeds, Glasgow, Belfast and Sunderland.
“Many are still selling at half the price they were pre-credit crunch (eight years ago) and are not likely to recover, potentially for decades.”
Faulkner thought some buy-to-let lenders haven’t been sufficiently trained on buy-to-let as an investment.
She said: “Investing in buy-to-let can impact on the tax an investor has to pay. Adding extra income through rent to their salary can, for example, mean losing child benefit payments.
“Lenders aren't insisting and few advise on how investment properties should be bought from a legal perspective (ie tenants in common), nor are they taking any real responsibility to make sure the landlord lets the property legally to tenants or safely through a CMP protected letting agent.
“So for me, to just 'lend' money on buy-to-let based on basic criteria and not know/explain the wider implications of investing such as tax and the legal responsibility a landlord takes on, isn't good enough.”
