A new study has revealed the forecasts for the buy-to-let market and hints at bad times ahead for investors, landlords and agents until 2021. After three years, it is predicted that the market will stabilise, and return to growth for the following two years, up to 2023.

The study was commissioned by Shawbrook Bank, and undertaken by the Centre for Economics and Business Research, with the aim of providing an analysis of buy-to-let market activities for the next five years and examining this projection in contrast to a scenario where no Government policy was introduced. This scenario omitted an assortment of policy interventions introduced by the Government, including stamp duty land tax, stricter PRA underwriting standards and mortgage interest tax relief.

Shawbrook Bank explained that this examination permitted analysts to understand the importance and consequences of these policies, and how these measures have influenced the property investment market. The research has confirmed that a considerable change has taken place in activities within the property market following new government interventions in the form of regulation and fiscal adjustments. For instance, the amount of approvals for buy-to-let mortgages to purchase houses fell by around 13 per cent in 2016. This was succeeded by an even sharper drop in 2017, of around 27 per cent.

The report from Shawbrook Bank predicts that the changes incurred by the Government’s policy reforms will continue affecting the buy-to-let market until 2021. However, it is expected that the effects from policy changes will become less punishing than in recent years. There is predicted to be high demand within the sector for quality private housing, with a core of good and professional landlords counteracting the effects of policy changes.

In the years following 2021, it is expected that the buy-to-let market will experience moderate growth, up to 2023. In contrast, Shawbrook Bank has predicted that in the no-amendment scenario, buy-to-let mortgage share would have stayed greater for longer, with an average rate in 2018 to 2023 of 13 per cent, in comparison to only 7 per cent in the analysis of the new scenario.

Shawbrook’s Commercial Mortgages Managing Director, Karen Bennett, has commented on the data, and stated that while changes in regulation brought in by the government have impacted the buy-to-let sector, an increased burden has been felt by the beginner landlord community. Political turbulence in recent times has impacted investor confidence, but the market remains resilient for those investors with a longer-term strategy who seek professional advice in the wake of such policy shifts.

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