A real Tory wouldn’t hit buy-to-let

 

Of course crooks and slum landlords will always exist, however, going after all landlords is a very un-Tory move from Chancellor Osborne that won’t help – or free up any under-used space.

George Osborne is, in a sudden repulsion against market economics, penalising buy-to-let investors, and – as a result – their tenants.

The Chancellor’s clampdown on buy-to-let is puzzling. With the slow disappearance of public housing, private renting seems to become the eternal safe haven for many young adults, especially in bigger cities. Those young adults, called “Generation Y”, are the migratory rich, millennials, those unable to afford their own home as well as those very poor ones, who can’t get a council tenancy.

In the decade between 2001 and 2011, private renting in London increased from 17% to 26% of the overall housing market. And it continues its rise.

Nevertheless, London it also the least densely occupied big city in Europe, only a quarter of that in the French capital, Paris. Even so, Londoners are now occupying 50% of bedroom they did in 1975. To encourage the release of under-occupied space may be the only fulfilling answer to the housing shortage. And the most efficient way of achieving this is by encouraging letting.

Renting, historically, is the most efficient way of using property in an urban conurbation. It makes for a more adaptive lifestyle. It builds the first, last and only alternative for the homeless, refugee and the younger middle-class.

Without a doubt, there are crooks and slum landlords out there. But persecuting all landlords in one go won’t help anyone. Racketeers exploit the shortfall of appropriate housing and the lack of regulations. The UK’s private rental sector is definitely under-regulated, and it needs stricter guideline. But they need to still give the market room to breathe.

Germany, for example, where housing is mainly rented and regulated, has a property market where space is efficiently allocated and has little to no house price inflation.

Even looking one step further, at how Osborne is penalising the market, doesn’t make any sense. If the Chancellor is worried that banks might end up over-lending to small rentiers, he should let the banks assess that risks, rather than micro-managing them by increasing stamp duty.

For George Osborne, the housing market is a form of private savings. The Government subsidises house purchase through mortgage aid, pushing savings into motionless property and encouraging the under-use of living space.

All of this leads to only one thing: the drive up in rents in the rental sector and therefore increase in costin the already soaring housing benefit budget.

What the Chancellor should be doing is, in fact, the complete opposite. What he should support is the sub-letting of rooms, buy-to-let, Airbnb as well as any other form of rental. He should, indeed, promote rather than tax market activity. This would attract supply from the source of new housing that is the most prepared: under-used space.

What George Osborne should be doing is help, and not hinder, the matching of supply and demand. That would be the real Tory thing to do.

Source: The Guardian

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A real Tory wouldn’t hit buy-to-let

A real Tory wouldn’t hit buy-to-let

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