The war on buy-to-let

Whilst ensuring there’s more support to help people get on the housing ladder is important, it’s also imperative to remember that owning a home isn’t what everyone wants. The flexibility and freedom renting brings is often desirable to many.

Building more affordable housing to help first-time buyers should be high on the governments agenda, but this crusade against landlords seems misguided.

The impact of forcing landlords out of the market hasn’t been thought through and it’s far too simplistic to assume that these properties will be taken up by people wanting to own their own home. Once again, we’re seeing the effects of not having a sustained and respected housing minister, able to implement long term policy.

I suspect the government is driving out small-time landlords to enable big business and the insurance giants to snap up huge swathes of rental real estate. But the huge rents charged in the private rented sector are but another symptom of our broken, dysfunctional housing market.

With next to no social housing being built, people looking for somewhere to live are left with no option to pay sky-high rents to private landlords. Leading to family insecurity and increased homelessness, whilst reducing living standards as there's less disposable income to support the economy.

It's hard to think of a worse policy failure over the past 25 years.

The solution? We need to start building social and private housing at scale and include property prices in the 2 per cent inflation target to restrict house price growth.

A war on landlords isn't going to make rents any cheaper. A vast shortfall in supply vs. demand is driving prices up and pushing landlords out of the market doesn't help to address that. Don't hate the player, hate the game as they say, so until someone actually comes up with a coherent plan to build enough houses we're not going to actually address the issue.

The Government have started 'a war' with landlords and involving the FCA (through lending regulations), HMRC (through tax legislation) and local authorities (through licensing). In an all too simple strategy to bring about affordable housing they assumed landlords would sell up. However, landlords are proving far more robust and savvy in their knowledge of their market. The relatively weak current Government cannot u-turn on this due to the inevitable public outcry, and house builders are unable to hit the Government targets set out. A lack of supply in the housing market therefore continues to drive prices higher. Landlords provide a valuable commodity in housing. Making it more expensive for them to own means the end effect is felt hardest by tenants and first time buyers, the very group the Government were intending to benefit.

It's tough times as a landlord at the minute from a mortgage viewpoint. In recent years to assist with the tax implications of owning properties in personal names many landlords have moved to owning the properties via a limited company. However, financing any buy-to-let mortgage via a limited company at the minute is incredibly expensive and we don't seem to have seen the drops in interest rates that we have in the residential sector.

Not everyone can or does want to own their own home and if there is not enough social housing being built landlords will always be required. If landlords continue to sell off properties there could be an even bigger housing crisis than there already is. The government would be better off tackling the issues around second/holiday homes than continuing to attack landlords.

We all know that a healthy private rental sector is key to ensuring housing for the many people who can't, or just don't want to, own a home at this point in their lives. The problem is that the government sees this area as low-hanging fruit in terms of tax revenue, no one's going to be marching on Westminster calling for the fairer tax treatment of landlords, so the political fall-out of increasing the tax burden on this area of the economy is seen as small. It also has great political capital with certain aspects of the media, where politicians can be seen to "crack down on slum landlords", when in fact very few landlords would fall into this definition, yet all landlords are then caught by the rule changes that ensue.

I'm sure there are a lot of negative comments about taxes, sections and other restrictive things for landlords, I won't add to the noise, but I think a lot of people forget something rather critical. A heck of a lot of government ministers and officials own property and fund themselves with this. They will not go too hard if it starts to eat into their profits. Its a probability that most of their properties are unencumbered, but the ones that arent will still be against pushing the scales too far.

The Government, quite clearly, are looking to move the buy-to-
let sector from accidental and unregulated landlords to big corporate. The war isn't on buy to let per se it seems to be a move to big, new build, built-to-rent schemes with on-site amenities which are professionally managed.

An immediate concern is how this model operates outside of big cities and central locations, how the model translates to growing families moving from apartments to housing etc.

As small, non-corporate landlords exit the market those properties are naturally going to fall into the residential sales market, which reduces the amount of available and affordable properties to rent, pushing rental prices up, making another sector of the property market unaffordable for those on low incomes.