In particular, the Government ought to recognise the contribution of private landlords as tax changes could seriously affect the buy to let market to the detriment of those who cannot or choose not to buy a home.
In a response to the Government’s new stamp duty regime for second homes, Paragon Mortgages says that there should be a comprehensive review looking at the housing dynamics over the last 30 years.
‘Whilst we agree that support for home buyers is an important strand of housing policy, if the interests of home buyers are prioritised above the interests of those in the Social Rented Sector (SRS) and the Private Rented Sector (PRS), then serious distortions may arise as a result to the detriment of those who cannot afford to buy or choose not to buy,’ the document says.
‘Policy changes that may result in reduced supply of properties to the PRS, risk driving up rents and constraining choice to the disbenefit of those who rely on the PRS for a home without delivering corresponding benefits in owner occupation,’ it explains.
The document also says that there are more significant structural issues at play in the heart of the housing market so the review is needed to look at housing provision across all tenures.
Paragon has been operating in the buy to let market since the inception of this specialist finance for landlords in 1995 and says that it has extensive experience of the market, a deep understanding of how landlords operate and how important buy to let finance is to the supply of property to the PRS.
‘What the Government appears to be overlooking with their focus on driving up home ownership, is that regardless of aspiration, home ownership is not a suitable solution for everyone. Some demographics need and want to live in the PRS because it best suits a variety of their individual requirements including lifestyle choice and financial capability,’ said John Heron, director of mortgages at Paragon.
‘The proposed 3% increase in Stamp Duty will not bring the market to a grinding halt and is unlikely to deter most landlords from their current, immediate investment plans but it will undoubtedly impact on some landlords’ future plans for growing their portfolios,’ he explained.
‘Our fundamental issue with these changes and also the proposed changes to tax relief of mortgage finance is that private landlords provide a valuable contribution to the wider housing market mix and this is not being recognised,’ he added.
‘With a declining social housing sector and with more people choosing not to buy their own home, it is important that the service the PRS provides is not overlooked,’ he concluded.