Its executive director Peter Williams told the PRA to take into account how its actions will impact the supply of property and levels of rent.
IMLA has warned the Prudential Regulation Authority to avoid adopting a one-size-fits-all approach to regulating buy-to-let.
Its executive director Peter Williams told the PRA to take into account how its actions will impact the supply of property and levels of rent.
Yesterday the PRA launched a consultation paper on buy-to-let which proposed that lenders must stress test loans for five years or against a rate of at least 5.5%.
Williams said: “We would… caution against a broad-brush ‘one-size-fits-all’ approach that risks dumbing down the market.
“It is encouraging that the rules include some flexibility for lenders to use other disposable income in affordability assessments.
“To make the proposals practical, the consultation should consider how lenders will need to model landlords’ costs and also how they calculate the level of rent for affordability assessments.”
He spoke of how this is a critical time for the buy-to-let market, which will have to cope with a 3% stamp duty surcharge from 1 April and 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.
Williams added: “It is important that these rules do not set minimum standards at a level any higher than is necessary to achieve a sustainable level of activity.
“Buy-to-let plays a significant role in supporting the private rental sector to meet housing demand from the UK’s growing population.
“The consultation needs to bear in mind their potential effects on the supply of rented property and levels of rent, factors which are oddly excluded from the impact assessment.
“We assume the PRA standards and any FPC requirements will be aligned but we now have a further period of uncertainty before that can be clarified.”
