Buy-to-let not to blame for supply problems says CML

The government and the Bank of England must not put too much of the blame for a lack of housing supply on the buy-to-let sector, according to the Council of Mortgage Lenders.

Earlier this month, the Bank warned that strong growth in buy-to-let could threaten the UK’s financial stability if it attracted too much investment. Recent industry figures show that the amount lent to landlords had risen sharply so far this year.

But Paul Smee, the CML’s director general, asked whether there was a risk that the buy-to-let sector was taking “too much of the rap” for a wider policy failure to boost Britain’s housing supply.

He added that, even though ministers were introducing measures to help people get on to the property ladder, “achieving home-ownership may get marginally easier, but it won't suddenly become easy”.

“A lot of people are going to be renting - by choice or by necessity - for as far ahead as we can realistically look,” Smee said. “The private rented sector - and, within it, buy-to-let - is an entirely normal part of the market. The relative size and popularity of the buy-to-let market will ebb and flow under different market conditions, just as the flow of lending to owner-occupiers will.”

He added: “The popular narrative may sometimes have a tendency to overstate the potential impact that could possibly arise from a sector of the market that funds only a third of the total private rented sector, and is less than a fifth of the total mortgage market.”

Smee said that recent growth of the sector should be viewed in the context of a particularly sharp decline in buy-to-let lending following the financial crisis.