Landlord lending restrictions risk housing shortage

Permalink: Landlord lending restrictions risk housing shortage
by Gill Montia

Asking rents rose by 1.2% in February and the news has prompted LetAssured managing director, David Plaister, to warn that a severe housing shortage looms if buy-to-let lending restrictions are not lifted.

According to the latest index from FindaProperty.com, the average UK rent stood at £814 pcm last month, the number of properties available having fallen to its lowest level since November 2008.

Mr Plaister believes landlords are actually withdrawing from the market because they are unable to raise buy-to-let mortgages at a time when the number of potential first-time buyers excluded from the housing market is rising.

The Council of Mortgage Lenders (CML) is also focused on the UK’s housing shortage, either let or owner occupied.

Reporting on its recent “Future Housing” conference, the CML suggests “a chronic lack of supply of housing of all tenures seems set to persist”.

The lenders’ body believes that private sector funding constraints and public sector cutbacks are likely to produce a significant shortfall in the supply of both housing finance, and housing itself.

Between 1999 and 2009, the number of new homes built each year ranged from around 130,000 to around 170,000.

However, the Government’s National Housing and Planning Advisory Unit estimates a range of 238,000 to 290,000 new homes are needed per year to meet housing need.

The CML is also expecting to see a smaller proportion of homeowners and a higher proportion of tenants, mostly in the private sector, in the years ahead.

Changing consumer preference and affordability pressures will drive the trend.