The Intermediary Mortgage Lenders Association has slammed the government’s proposed energy performance certification legislation as “unrealistic” and said threats of “even more draconian” laws risk the health of the rental sector.
In a report on the rental sector released yesterday (June 15) the IMLA called for greater support for landlords and said the effects of regulatory and tax changes, alongside the current sharp rises in buy-to-let mortgage rates, risk “putting increasing numbers of private landlords out of business”.
The representative body was critical of the forthcoming renters reform bill - which will ban no fault evictions - and described the current regulatory climate as increasingly hostile.
In addition to criticising government efforts to support renters and meet its climate targets, the report flagged that rising mortgage rates are forcing landlords to increase rents.
The report noted that until the start of 2022 landlords had enjoyed a long period of falling financial costs.
However, the dramatic rise in interest rates seen over the course of last year has meant that profit margins for landlords with mortgages on their properties have been squeezed.
The IMLA cited a report from Octane Capital which claims that landlords needing new deals have on average seen the cost of their monthly interest payments jump by 75.7 per cent over the last two years.
It noted that while the majority of landlords are still on low fixed-rate loans for now, their interest payments will rise over the coming months as they reach the end of their current fixed deals and that this will put additional upward pressure on rents.
IMLA executive director, Kate Davies said the outlook facing the private rented sector, which serves some 4.6mn households, is negative unless policymakers’ approach to the sector changes.
“Demand for rented housing is clearly high, and measures to increase tenant protections are important.
"However, the focus now needs to be on prompting increased investment in the sector and supporting landlords, whose operating costs risk becoming unaffordable.
"If we don’t get the balance right, the result will be higher rents, and lower availability of properties – both of which are bad news for tenants and landlords,” Davies said.
jane.matthews@ft.com
