Buy-to-let: the past is no guide to the future

Thrugelmir

Since buy-to-let emerged in the mid- to late 1990s, it has grown strongly. Lenders have advanced more than 1.7 million buy-to-let loans since we began monitoring the market in 1999. Over this time, the private rented sector has seen nothing less than a renaissance – doubling in size over the past 12 years, following decades of steady decline.

Buy-to-let mortgage balances outstanding recently grew to more than £200 billion – equivalent to the gross domestic product of Hong Kong.

Given the growing importance of buy-to-let and the debate about its future, we would like to expand our statistical coverage of the market. We believe it would be helpful for all those interested in the development of buy-to-let – and its role in the private rented sector – to have more market data.

Today, we are publishing some new statistics on the geographical spread of buy-to-let and the types of properties favoured by investors. This data is not necessarily indicative of the way in which we would like to expand our market coverage, but it does present some new insights into the sector.

http://www.cml.org.uk/news/buy-to-let-the-past-is-no-guide-to-the-future/

Garethgrew

History doesn't always repeat but it rhymes

If anybody says they think boom and bust is over, they may be in for a shock.

Graham_Devon

It's a shame about the conclusion on that piece. Seems to be another scare piece about what might happen if the government does anything within the BTL sector.

On another note though, as the conclusion mentions it. Is there any evidence at all that the BTL sector spurs house building?

I would have thought that house builders couldn't care less who they sell to? So anything which spurs buying activity should spur on house building?

wotsthat

There's investment risk with BTL like any other investment.

If, to date, that risk has never materialised then it's understandable that some people think it never will.

cells

Graham_Devon wrote: »

On another note though, as the conclusion mentions it. Is there any evidence at all that the BTL sector spurs house building?

maybe fractionally. In some areas flats were built and the only buyers were BTLers as all the owner occupiers would/did prefer to buy cheaper and arguably better local terrace homes

So without BTL maybe some sites with flats would not have been built or would have been built as houses (but less houses on the plot. so eg 20 homes rather than 50 flats)

but I think its only a fraction of a fraction and maybe even negligible

padington

Osbawn taxed buy to let for three reasons, I think ...

1) He genuinely wants to give first time buyers a chance
2) He believe the capital appreciation of property is going to be large in the next five years
3) He wants more of that money to help slow down the growth of our national debt.

Crashy_Time

padington wrote: »

Osbawn taxed buy to let for three reasons, I think ...

1) He genuinely wants to give first time buyers a chance
2) He believe the capital appreciation of property is going to be large in the next five years
3) He wants more of that money to help slow down the growth of our national debt.

Wrong. He realises that if the banks don`t start lending big time to a new generation of debt serfs they is screwed, the only way to do this is to have HPC. There will be a massive boost to the economy when houses are cheap, and for this reason he needs HPC. They don`t care about over-borrowed BTL mugs now, the QE`d funny money has done it`s work, and someone with no mortgage who thinks their house is worth a million quid might as well be an extra playing a bad guy in a Steven Seagal movie, they have no value in a system that relies on ever expanding new debt.

padington

Crashy_Time wrote: »

Wrong. He realises that if the banks don`t start lending big time to a new generation of debt serfs they is screwed, the only way to do this is to have HPC. There will be a massive boost to the economy when houses are cheap, and for this reason he needs HPC. They don`t care about over-borrowed BTL mugs now, the QE`d funny money has done it`s work, and someone with no mortgage who thinks their house is worth a million quid might as well be an extra playing a bad guy in a Steven Seagal movie, they have no value in a system that relies on ever expanding new debt.

I like you crashy, you're a good economic barometer. Everything you say the opposite happens.

Crashy_Time

padington wrote: »

I like you crashy, you're a good economic barometer. Everything you say the opposite happens.

Except when I`m talking about the FTSE and Aberdeen :rotfl:

Carl31

padington wrote: »

Osbawn taxed buy to let for three reasons, I think ...

1) He genuinely wants to give first time buyers a chance
2) He believe the capital appreciation of property is going to be large in the next five years
3) He wants more of that money to help slow down the growth of our national debt.

if he times it right, and pushes for a large number of current BTLers to sell up mid way through the current government, that's a lot of CGT heading his way, just in time to remove the deficit before the next election, plus the extra receipts from the additional income tax

wotsthat

Carl31 wrote: »

if he times it right, and pushes for a large number of current BTLers to sell up mid way through the current government, that's a lot of CGT heading his way, just in time to remove the deficit before the next election, plus the extra receipts from the additional income tax

I find these complicated theories about the Chancellor's BTL tax and his thoughts and plans for the sector quite compelling and clever. However, we might need to remember the cornish pasty tax, caravan tax, the increase (and subsequent decrease) in taxes on the North Sea to remind ourselves that not all tax increases have been artful or led to the government meeting their own deficit targets let alone removing it.

I'm minded to believe these are old fashioned tax increases that are popular because 'other' people pay them. Quite interesting to see how they play out because they target a specific group of investors rather than BTL as a whole but I find it difficult to believe Osborne has an underlying grand plan for BTL.