“This is all simply politics – this is nothing to do with managing the buy-to-let sector. It is about appealing to the public and setting out the stall that the government is pro-homeownership."
IMLA executive director Peter Williams has accused the government of playing politics with housing by hammering buy-to-let and putting too many proposals for housing in place at once.
The Intermediary Mortgage Lenders Association chief said cracking down on landlords and announcing new housing initiatives twice a year was more about appealing to voters than dealing with the market’s underlying issues – a lack of housebuilding, transactions and incentives for older homeowners to downsize.
In the past year the government has introduced a 3% stamp duty surcharge while the amount of mortgage tax relief landlords will be able to claim back will be cut back from 45% to 20% between 2017 and 2020. The Financial Policy Committee is also set to be given powers to tackle buy-to-let.
A series of schemes including Right to Buy for housing association tenants, Help to Buy London and Starter Homes have also been introduced.
Williams said: “This is all simply politics – this is nothing to do with managing the buy-to-let sector. It is about appealing to the public and setting out the stall that the government is pro-homeownership.
“It’s popular but at the same time the government knows that it needs a private rented sector and it has to tread a delicate line.
“They are hoping like hell that homeownership will pick up again and there are major question marks on whether that will happen.
“The question is whether Starter Homes and Right to Buy will prevent the decline of homeownership, but in the scheme of things they’re relatively small fry.
“There are too many proposals working a way through the system to interpret how the sector is performing.”
He called the assault on the private rental sector “very selective” since it focuses primarily on mortgaged buy-to-let rather than cash purchases, although he was pleased the government has removed the “arbitrary” 15 property stamp duty surcharge exemption.
Last week the government published a prospectus document on the Starter Homes initiative, which aims to build 200,000 homes for first-time buyers by 2020 which will be sold at a 20% discount.
With so many schemes being introduced Williams wondered whether they could get in each other’s way.
He said: “Another announcement means you have to set up processes and procedures. These are all administrative problems.
“Did the buyer understand it? The ink is hardly dry on one initiative before they’ve introduced the next one.
“There is the suggestion the Help to Buy and Starter Homes initiatives could be linked which would be quite generous.
“But helping the consumer understand that they have an equity loan and a discounted product is adding lots of complexity before they are even offered a mortgage. Somewhere the lender has to work out how much they can afford.
“It’s getting complicated and this is before the courts judge whether the customer is properly advised or not.”
Williams called for devolution to local authorities rather than one-size-fits-all measures, while he said older homeowners should be given a stamp duty exemption to free up stock for young buyers.
He said: “We have national housing policy and local policy markets. Policy needs to reflect local needs.
“It’s got to the point now where the task is so great I’m not sure how any government could tackle this. We are not in a good place. As lenders, we will continue to do the best we can.”
