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If you do all that you probably don't have to worry about BTL mortgages as no-one will be tempted to buy one. FWIW I don't think that's the end of the world, you just need to cash up housing associations to scoop up the stock that will be dumped on the market. Question is whether you allow housing associations / government to borrow money to buy property (joke).
There's always a tension in this argument. The strata of better-off tenants would have a better chance of buying their own place, I agree, but there is a less well-off bucket of tenants that would do worse.