We knew the Prudential Regulation Authority’s plans were going to come into play following the publication of its consultation paper in the spring and, as there were very few changes to the proposals laid out in the paper, there was very little to be surprised about. But while the sector has, as it tends to do, accepted the challenges and moved on, one wonders whether there’s more to come. Should we be wary of any more regulatory overhauls on the horizon?
I think it would be remiss to think that there will be no further regulation in the buy to let market. The steps taken by the PRA may not be deemed enough by the government and the Bank of England. We may well see the FCA step in. Indeed, the regulator has suggested as much this year. Whether this will happen in 2017 however seems unlikely. The market will take some time getting to grips with the tax relief changes that come into effect in April – I can’t see the regulator deciding to overhaul the sector’s regulatory requirements at the same time.
Contrary to what doom-mongers may suggest, all of this won’t mean the end for your business. Buy to let is a huge industry that provides opportunities and profit for many people. It is not a small niche market that will buckle under the pressure. However, it will mean a change to your client base.
Indeed, I think this will be one of the most significant developments we see in 2017. Buy to let will become more ‘professional’. Serious investors who are committed to the property market and dedicated to being a landlord will stick around. Those landlords who have no real interest in the market will no doubt sell up when tax relief changes make things a little less profitable. Amateur investors who are thinking about trying their hands at the PRS will likely reconsider when they realise the hoops they’ll need to jump through to access mortgage finance. And none of this would be a bad thing. The market will be viewed more as a business opportunity and may well gain some respect from that. Who knows, it may even be seen in a good light by the naysayers for once!
