Measures which discourage investment in the private rented sector in the face of population growth and low housing supply can only push up rents and harm tenants more than landlords, a new report from the Intermediary Mortgage Lenders Association (IMLA) warns.
The report - Segmenting the UK mortgage market - examines the key issues facing the main segments that make up today's mortgage market. Assessing the possible impacts of July's BTL tax changes, IMLA argues a higher tax burden for landlords - which will push some into losses after tax and raise the effective tax rate on their buy-to-let above 100% - may slightly skew the market in favour of owner-occupied house hunters, by reducing the price that landlords are prepared to pay for any given property.
The risk, however, is that these changes and the threat of tighter BTL mortgage regulation will constrain the supply of available rental properties at a time when the fundamentals of population growth and low housing supply are driving an increase in demand, and that institutional investment will fail to make up the gap.
The IMLA report shows total lending across the mortgage market this year was running below its 2014 level from January to May. Since then, there has been a sharp recovery and 2015 may be shaping up to be a mirror image of 2014.