The bill for the government’s misguided war on buy-to-let is coming due.
The Royal Institution of Chartered Surveyors (RICS) said yesterday that rents are likely to rise by 25 per cent over the next five years, outpacing house price growth, as landlords pare back their portfolios and tenants are left to fight over a diminishing supply of properties.
This can’t even be deemed an unintended consequence of government policy. George Osborne’s introduction of a higher rate of stamp duty for the purchase of additional properties and the sharp planned reduction in mortgage interest tax relief (which will make many buy-to-let properties unprofitable) can only have been designed to push landlords from the market.
Perhaps a few first-time buyers have been helped at the margin, no longer competing with landlords in some areas. But for the countless others who either can’t afford to buy their own home, who prefer the flexibility of renting, or who simply haven’t decided where they want to settle down, this assault on buy-to-let looks like a disaster.
Private sector landlords have long been a political bogeyman, perceived as unfairly monopolising our constrained housing stock. This lays the blame at the wrong door. Housing has become unaffordable because of restrictions on the supply of new homes, not because some people have decided to invest in property, whether to top up their income or to complement their pension.
In fact, there can be no solution to the housing crisis without the enthusiastic involvement of individual landlords, who provide homes for millions across Britain.
The government has made welcome moves to support the institutional rental sector, large investors who construct purpose-built properties that provide stable returns and attractive homes for tenants. The likes of Legal & General have made great strides in getting this off the ground, but it is currently a minor segment of the total housing mix and cannot yet take up the slack if ordinary landlords leave the market in a big way.
Loading landlords with extra taxation and more bureaucracy is not a free lunch – someone has to pay, and as RICS has found it is likely to be tenants. So while it’s welcome that this week’s Housing White Paper opted against dangerous new measures like rent controls, the government mustn’t ignore the damage its existing policies are inflicting on Britain’s landlords and renters.