The Government’s attempt to annihilate the buy to let market as a form of investment was unexpected, unwelcome and unreasoned. As always, private landlords have been portrayed as exploitive and greedy, fulfilling the role of arch villain in Britain’s housing market, providing the greatest obstruction to the younger generation wanting to take their first step onto the housing ladder. Correct?
Not wholly. As a generalisation the most vocal of the anti-buy to let brigade would appear-as far as I can see-to be those who couldn’t/wouldn’t/didn’t join the buy to let market. Welcome to the politics of envy. The vast majority of landlords supply good accommodation at a fair rent and are well regarded. They are the providers of something that people need and are thus recompensed for that provision; the fundamental tenet of a business transaction. Preventing people buying a new home, have we all chosen to forget what happened in 2007? The result of which is the current stress testing and mortgage market reviews where even Lord Grantham’s offspring would struggle to be approved. As for the perceived rapacity of the landlord fraternity who ‘force’ tenants to pay extortionate rents? In the NP44 postcodes, a property priced higher than the current market rate will not shift. If someone desperately wants to live in that specific house, they will pay, just as they will pay in the W1 postcodes in London an eye-watering amount for a property because they ‘have’ to live in Kensington. Welcome to the world of market forces.
Looking at what Gideon did in his election speech, I mean autumn statement, he did not really attack those dastardly money-grabbing landlords; if anyone has more than 15 rental properties, it does not apply. If though someone is an accidental landlord, who has been forced to go down the rental route because circumstances mean that they are unable to sell, then unlucky.
The people who will be adversely affected are tenants, because if a landlord has to pay an extra £5000 in tax when buying a property, then rents will rise accordingly. How does this help the first time buyer who is probably renting? I fail to see how such a tax is going to suppress the buy to let market and curtail the perceived avaricious activities of ‘fat cat’ landlords. Incidentally, the implication is that their property portfolios have been acquired through nefarious activity, as opposed to skill and hard work. Theft and/or a dead relative may also have contributed but equally, they may not. The politics of envy, don’t you just love it?
What will be of interest, is how the buy to let market and the new rules will be policed and how parties will find ways round it. If a potential landlord applies for a buy to let mortgage, the paper trail is easily followed; but what if the buyer is buying a house for ‘development purposes’ to upgrade and then sell, then can’t/or had no intention of selling it and then rents it out. Does this accidental landlord have to pay extra stamp duty? I foresee lenders marketing a range of ‘development funding’ mortgages. The question is how are these going to be policed, audited and monitored?
One final question, is George becoming the man of the people, or Gordon Brown and could this autumn statement be what takes away, rather than gives him the keys to Number Ten?