For many years now, BTLs or ‘’buy to lets’’ have been an increasingly popular retirement planning vehicle, with many individuals preferring the ‘’safe as houses’’ route to the vagaries of the stock markets that are an integral part of pension savings.

And while the Government’s new pension freedoms have transformed the flexibility and tax effectiveness of pension plans almost overnight, BTLs still remain very popular.

Yes, the boring and rigid old pension plan just got significantly sexier and is rapidly becoming the asset of choice for individuals requiring income flexibility, tax efficiency and estate planning in retirement. But for some the ability to release funds has simply opened the door to BTL.

Recent research tells us that some individuals have been cashing in their pension plans under the new freedom rules simply to raise a deposit for a BTL. But does it still represent good value… and how secure is this income?

While the credit crunch saw many property bargains out there – particularly in some areas of the country – prices have risen strongly in the last 18 months; and whilst the BTL market is far from saturated, good deals have become difficult to find. That said, individuals continue to be tempted by the prospect of a ‘’secure’’, regular return on their investment along with capital growth from rising property prices.

The BTL industry marches on. In the lead up to the tax changes this April, house prices actually moved up as a result of last minute investors piling into the market.

Many appear to have ignored the serious headwinds that are aligning in the BTL market and this may be because the most damaging of them – the change to mortgage tax relief on BTL interest payments – does not bite until 2020. BTL investors may be thinking ‘’let’s make hay’’… and why not with no real appetite from Government or the building industry to alleviate the UK’s acute housing shortage.

However, there are more immediate headwinds for the market to endure. On April 6th, the first tax hike for BTLs kicked in – with stamp duty on second homes up by 3%. That’s unlikely on its own to shake the BTL market – after all, capital growth in many regions of the country is considerably currently north of 3%. BTL investors are (or should be) in it for the longer game, and losing one year’s capital growth shouldn’t be too painful.

There have also been changes to the way tax relief on debt interest works, and to how landlords claim relief for repairs and maintenance. Again, more erosion to the bottom line.

But there is more: just this week the Bank of England announced new proposals where BTL borrowers will be assessed for mortgage purposes on their wider incomes and liabilities – and not just on their BTL income. Lenders will also need to reassess whether the rent receivable presents a large enough margin over mortgage interest and to determine if the property’s ongoing fees and management costs together with the higher tax charges in the future will have any adverse effect on the borrower’s income stream.

Not only will such changes impact individuals new to the BTL market but also existing borrowers who need to re-fix their fixed interest rate deals.

Not every BTL investor, of course, is reliant on a mortgage. Equally, many of those who are mortgaged will have a low loan to value ratio. But for those that are, or plan to be on a relatively highly leveraged mortgage, it’s a potentially worrying shift.

While a typical 3 – 5% net return on investment sounds quite rosy, which is what can typically be achieved at the moment, factors such as void periods – have to be taken into consideration for those whose margins are relatively tight.

The Bank of England proposals are subject to consultation so we will have to wait and see whether this “triple whammy” really does impact the BTL market. The Chancellor will not want to overcook it, and oversee a mass exit of BTL investors…

Like all investments, it’s important to look at the underlying fundamentals of the market: each year we are still building around only half of the new houses we need to in order to meet demand. The lack of property and the inexorable supply of tenants may have more to say in determining the wisdom of being a BTL investor in the years ahead than moves by the Chancellor to extract extra revenues and “level the playing field”.