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It may be a realisation that many core Labour supporters are now reliant on rent from a buy-to-let property to supplement their pension. The divide between workers and capitalists may not be as clear cut as they would wish.
Guardian targets landlords
If the Labour Party has gone soft on landlords but we can still rely on the Guardian to carry the flag of the disaffected renter. We have Patrick Collinson lording it over us about how landlords get huge tax breaks now supposedly to the tune of £14 billion he reckons. At the same time it's all the landlord fault that house prices continue to be unaffordable for many first time buyers. His presumptions are totally ridiculous from the start. It is that the 1.4 million landlords have all built up huge portfolios of buy-to-let properties and in many cases have made extraordinary profits. Firstly, he should realise that most landlords own a single property. Far from making incredible profits they earn a reasonable return for the amount of capital both financial and time wise they have invested. It is like pronouncing that everybody with an Internet business is automatically a billionaire. As for tax hand outs. The tax breaks are far less generous than are given to most businesses because running a buy-to-let is classed as an investment and not a trade. But more fundamentally, the point that he misses is that despite all these fantastic tax breaks my little letting business that turned over a meagre £40,000 still generated £22,000 in profit on which I have to pay tax. This 4 grand in tax goes to build schools, run hospitals, keep the roads surfaced. Contrast that with the alternative of housing my tenants in a council house or housing association property. Both that would cost the taxpayer massive sums of money to do what I do for free. In addition as a rental business I don't...have a highly paid chief exec, advertising dept, personal manager, pay for people pensions....my business runs for free. Does he not grasp that simple concept!
Landlords buyers of the last resort
As for landlords pricing first time buyers out of the market. My experience is that landlords are the buyers of last resort - they look to buy properties on the cheap. If they can't get a bargain or at a reasonable rental yield they simply move on somewhere else. I can't remember the last time that a landlord out bid a private buyer to seize the property out of the clutches of a deserving home owner. The thing that keeps house prices high is the ridiculously low interest rates and a faith of property owners that housing is a one way bet.
Paradoxically, if house prices had been allowed to crash, as they could have been, then this would have been undermined for a generation.
Landlords the whipping boy
Does Labour now loves landlords? I know that they don't ...but they do need our votes. As for the Guardian they have their market of disaffected middle class readers who feel that they have been 'robbed' of their natural right of home ownership. For this crowd the landlord will always be the convenient whipping boy.
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3 comments:
"Contrast that with the alternative of housing my tenants in a council house or housing association property. Both that would cost the taxpayer massive sums of money to do what I do for free."
It's not free.
You need to read the article you posted elsewhere on your site that says the annual subsidy to private rent is £24bn. That would build and maintain an awful lot of council houses.
"As for landlords pricing first time buyers out of the market. My experience is that landlords are the buyers of last resort - they look to buy properties on the cheap."
That's not right either. You're referring to professional landlords, who might behave like this. But as you rightly point out, most landlords are not professionals and own a single property. As such, they are rarely cash buyers and compete for buying a property just like anyone else.
Anyone with a rudimentary understanding of economics will know that the more buyers there are, the higher the price will go. BTL landlords increase the number of buyers, increase competition for houses and push up prices.
Nice theory on house prices. I do come at it from the point of being a property professional and investor for the last 25 years. My recent experience is a real one & is this:
I'm currently selling a property which has been valued at £125,000. To date I've had 2 offers both from buy-to-let investors at £100,000. On my calculation that's 20% below the price it's been valued at. Clearly, I'm not selling at this price. The presence in the housing market of these buy-to-let investors isn't pushing the price of this property up.
I'm looking for a nice first time buyer not an investor looking at snapping up a buy-to-let bargain and who are driven by yields and returns. I reiterate my point that buy-to-let investors far from pushing prices up act as underbidders in the property market hoovering up bargains and doing they're best NOT to pay the asking price.
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