Nouran Moustafa warns the pressure on landlords risks a cash-flow crisis that could spread to lenders and rates
Prime minister Andy Burnham left Liverpool with a housing agenda that promises to reshape the private rented sector, and mortgage advisers have been weighing what the proposals mean for landlords and the buy-to-let market ahead of the Budget.
Nouran Moustafa (pictured top), executive financial and mortgage adviser at Roxton Wealth in London, told Mortgage Introducer the cumulative pressure on landlords – stamp duty surcharges, the Renters' Rights Act that came into force on 1 May, Article 4 directions, selective licensing and an Energy Performance Certificate (EPC) requirement to reach a minimum C rating from 2030 – has already thinned the supply of rental homes.
Burnham's pledge at this week’s Labour conference to give councils powers to acquire neglected rental properties adds another layer on top of a sector she said is approaching breaking point.
The backdrop is already difficult. Moustafa said she now regularly speaks to first-time buyers in their forties – a shift she described as symptomatic of a market that has become progressively harder to enter. Average mortgage terms have moved from 25 years to 40. It now takes around a year to 18 months to sell a flat in London, she said.
"What is the thing that is stopping people from buying houses? What is the thing holding off home movers? It is the stamp duty," Moustafa said.
She stopped short of calling for stamp duty to be scrapped, but said the changes introduced under the current government had put a brake on transactions that were previously moving freely. The student rental shortage Moustafa described points to a broader supply problem that predates Burnham's proposals. Landlords have been pulling back from the market since the stamp duty surcharge on additional dwellings rose from 3% to 5% in October 2024, compressing margins before the Renters' Rights Act added further operational risk.
What does Your First Home actually solve?
Moustafa was sceptical about whether the Your First Home scheme addresses the real barriers facing buyers. Her concern is that even where buyers can secure a deposit through a government-backed route, the monthly payment remains out of reach. Mortgage rates, she argued, are still far higher than the base rate implies, driven by the gap between the money markets and the Bank of England's headline figure.
"Even if they can afford the house deposit, they can't afford the monthly payments," she said. "All of this money the Treasury is going to pay out in Your First Home deposits, where are we getting this money from?"
Her view is that the scheme primarily serves the government's housebuilding targets rather than buyers, and that the brokers most likely to benefit are those already embedded with large developers. The wider structural pressures facing the buy-to-let market ahead of the Budget have contributed to a slowdown that no new-build scheme alone will reverse.
Landlords, arrears and the default chain
The sharper concern Moustafa raised was the potential knock-on from continued pressure on landlords. She described a scenario in which a portfolio landlord, already absorbing the weight of the measures above, is pushed towards selling, only to find buyers cannot move either.
"These houses are not going to sell for a year or two because people can't afford stamp duty. Even if people can afford stamp duty, they can't afford the deposit, so they will go run after Andy Burnham’s new scheme."
The consequence, as she laid it out, is a cash-flow squeeze – tenants not paying rent, knowing eviction under the Renters' Rights Act is harder to execute, while the landlord cannot sell and cannot service the mortgage. As buy-to-let remortgage volumes have climbed amid the Renters' Rights Act's impact on landlord cash flow, brokers have already been fielding questions from portfolio landlords reassessing whether to stay in the market.
With properties unsold and rent arrears mounting, Moustafa said the landlord's position becomes untenable. "He starts defaulting on the bank mortgages. All of a sudden, the rates are going up. All of a sudden lenders are pulling out of the market. All of a sudden you have a new financial crisis."
The full implications of Burnham's housing pledges for landlords and buy-to-let lending will not become clear until the Budget sets out the detail of both the acquisition powers and the Your First Home criteria.
Moustafa was unequivocal about where she sees it heading. "His very small actions can lead the whole economy into a financial crisis."
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