Let’s be clear: the FCA’s recent Discussion Paper (DP25/2) isn’t necessarily about buy-to-let lending. At least, not directly.

It’s framed as a review of how the residential mortgage market might evolve, with a heavy focus on affordability, advice, qualification, and risk. But to view it purely through the lens of the residential sector would be a mistake.

This feels like a much broader piece of work, one that could shape the entire direction of the mortgage market and, in doing so, also shift the buy-to-let product and lending space. And that means its implications, while somewhat indirect, are both real and potentially significant.

Because even as buy-to-let sits – for the most part – outside the regulatory perimeter, the themes raised — who can borrow, how housing access is enabled, the changing nature of borrower demographics — all bleed into the way landlords, tenants, lenders, and advisers operate.

REAL IMPACT

Whether it’s reforms to first-time buyer stress testing, the way income is evaluated, or the rise of more holistic advice models, there is clearly going to be an impact in the PRS and buy-to-let.

But there’s something even more fundamental in this DP: a recognition that housing in the UK has changed structurally.

The paper is refreshingly honest about the fact that we now have millions of people in the PRS. Many of those do so by choice, but of course many would like/would prefer to own, but simply can’t.

It’s no mystery why. Since the late 90s, house prices have outpaced wages, often by some distance. Deposits, and saving for them are still a barrier. And while we may be in a period of relative interest rate stability, product pricing has clearly gone up in recent years, and affordability remains a fundamental issue for many would-be homeowners.

IS IT ENOUGH?

The big question out of this DP, in that regard, is whether that reality can be shifted, and by how much. Will greater flexibility and rule changes around how affordability is measured be enough?

For instance, the idea that a track record of paying rent could be used as an affordability marker in future is interesting, and the DP explores that. But it also rightly warns against oversimplifying the issue.

Being able to pay rent doesn’t mean you can afford the broader costs of ownership. Maintenance, insurance, property tax, repairs, all add up.

Plus, income volatility, job security, and wider financial resilience aren’t captured in rent payment history.

SLOW BURN

So even with more ‘flexibility’, how many renters are going to move into the owner-occupier space, and over what timescale? I would argue this is going to be a slow burn, and that other impacts such as ongoing population growth, and the future speed of house-building, are going to mean that the demand on the PRS isn’t going to change much anytime soon.

That could seem like an uncomfortable truth for some. Perhaps the Government being the most notable one. However, what should not be forgotten – particularly by policy makers – is just how important the PRS has been in filling the gap left by decades of underbuilding, missed housing targets, and a shrinking social housing stock.

And it continues to fill that gap because the alternatives – at least for now – just don’t exist at the scale required. The Government is making the right noises on social and affordable housing. New funding has been announced. But none of this delivers overnight.

With planning bottlenecks, construction capacity constraints and chronic skills shortages, it’s going to take years before these new homes appear, and even then, the numbers may fall short of what’s really needed.

In the meantime, the PRS is housing millions of people. And yet, just as this reality becomes clear, we seem to be introducing policy and regulation that still make it harder, not easier, for landlords to stay in the game.

We need to ask ourselves: what’s the risk if we get this wrong? What happens if landlords who might otherwise stay invested feel they can’t keep up with the costs, the regulation, the uncertainty?

That has happened to a relatively small degree, but there are future (significant) changes which might exacerbate that further.

The forthcoming Renters’ Rights Bill is a case in point. It may improve tenant protections – which of course is welcome – but it is also going to create uncertainty for landlords, particularly smaller ones who already feel under pressure.

If the regulatory environment tips too far, landlords will exit. And when they leave, stock falls, rents go up, and quality can drop – the exact opposite of what policymakers and tenants want.

We should absolutely be encouraging homeownership, and building more homes, and ensuring tenants are not ripped off. But we must also stop treating the PRS as a short-term stopgap. It is not. It’s a core part of the housing market. It’s where millions live and where they will continue to live for years to come.

If Government and regulators want to be serious about housing reform, they have to accept the PRS’s role in the system. That means supporting landlords to stay in the market, not squeezing them out.

Because until those new homes are built, until affordability genuinely improves, and until renters have more real options, this sector will remain essential. Ignore that, and we’re only storing up more problems for the future.

Steve Cox is chief commercial officer at Fleet Mortgages