Debate Magazine

The Disappearing Homes Conundrum.

Posted on the 24 July 2015 by Markwadsworth @Mark_Wadsworth

From City AM, in amongst the usual Home-Owner-Ist drivel we would expect:
For the economy, [restricting relief for BTL mortgage interest] would be a disaster. Between 1986 and 2012, 57 per cent of all new dwellings created were private homes to rent, the majority of which were by individual landlords providing vital houses for those requiring accommodation, especially those needing to move for work or study. These homes were not “taken” from those who wished to buy.
Yes they very much were so taken.
The home builders land bankers have a certain profit maximising level of output (currently 150,000 or so new homes per year) and that is how many they will allow to be built. And they will sell those to whoever bids the highest price.
If BTL landlords were squeezed out of the equation somehow, then prices would probably fall, but as the land bankers are monopolists, it is quite possible that they would release more land in response. (Others observed that when oil prices fell, output increased in response, because petro-states have to get a certain amount of income from oil.)
The demand for these homes is from the people who will live in them, they are the ones paying for them, landlords merely step in as middlemen and gamble on creaming off a few per cent difference between rents received and interest paid.
So to suggest that landlords increase the supply of housing is nonsense, and they don't even increase demand. What he is saying is like saying "without the supermarkets, farmers would have nobody to sell their food to". If people didn't need to buy food to eat, then supermarkets wouldn't bother buying it either.
And, dear Mr Ward, if you think that BTL landlords should be treated like proper businesses for tax purposes, why aren't you calling for VAT on rents and Class 4 NIC on net profits? Just like proper businesses?

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