Alongside the expansion of the buy-to-let scheme, the Council of Mortgage Lenders is making calls to the government to bring forward plans similar to other countries where depreciation and rental losses are offset against a landlords income, and changes to the rate of capital gains tax depending on how long a landlord holds onto a property.
The Council of Mortgage Lenders has also expressed concern that recent changes to powers that allow local councils to bring in their own licence schemes for landlords could deter new investors. They have urged that the government look at the current situations before introducing further regulation in the sector, citing mounting costs for landlords incurred by piecemeal regulation.
However it says that reforms are allowing the market to grow, and help make it easier for people to rent out their property instead of selling. Reforms by lenders, including the newly introduced buy-to-let mortgages are welcomed by CML. Lending to buy-to-let borrowers is conservative, with an insistence from lenders that those borrowing charge more in rent than is required to be paid on the mortgage to provide a buffer against loss during slow periods.
Currently most buy-to-let loans require short hold tenancy agreements, though CML is looking to change this; “Although shorter-term tenancies are likely to remain the most popular choice for most of those renting, we are continuing to work with lenders to understand the risks posed by longer-term tenancies – and how they can be overcome.”