Mortgages  

CML: beware of indefinite leases in private sector

CML: beware of indefinite leases in private sector

Indefinite leases and rent controls risk putting mortgage lenders off providing buy-to-let finance, the CML has said.

A 58-page paper, written by Daniel Bentley of Civitas, claimed the UK’s housing market is “a mess” because of a combination of a lack of houses being built and an economic environment which encourages investors to buy up existing housing stock without increasing supply.

To combat this, Mr Bentley’s paper, called The Future of Private Renting, said indefinite leases should be introduced as the norm while in-tenancy rent increases should be restricted to an index-linked ceiling.

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But the Council of Mortgage Lenders has said this would change the risk of providing finance to landlords.

CML spokesman Sue Anderson said: “Many participants in the market - including lenders - recognise the potential for increasing demand for longer-term tenancies among some tenant groups, and are responding to this.

“However, it is important that such changes happen freely, rather than as a result of compulsion or clumsy interventions.

“Rent controls and indefinite tenancies would, for lenders, significantly change the lending risks in providing finance to landlords, and could prove counterproductive if the objective is to maintain and enhance the vibrancy of the private rented sector.”