Agents slap down Bank of England's buy to let worries

The Association of Residential Letting Agents has slapped down the Bank of England's claim that stability of the UK economy could be threatened by buy to let.

The Bank's Financial policy Committee say lending to buy to let landlords has increased by 40 per cent since 2008, compared with just a two per cent rise in lending to owner-occupier purchasers.

Over the same period the proportion of outstanding mortgage lending accounted for by buy to let has risen from 12 per cent to 16 per cent.

The Bank fears that volatility in buy to let - with landlords selling in high volumes if house prices fall, causing prices to drop further, for example - means the scale of the sector now poses a threat to the wider economy.

ARLA, however, dismisses such an analysis.

"Buy-to-let landlords range from professional landlords, who make their incomes on their properties, to those who may own just one property and will be taking a long term view of capital appreciation, and so will hold on to it should prices fall" says David Cox, managing director of ARLA. 

"As long as rents are still covering the costs of buy-to-let properties, we don’t see landlords exiting the market in droves. However, what we might see is landlords struggling when mortgage interest rates rise – whenever this may be. As they fall into financial difficulty, many may be forced out of the market" warns Cox.