Sunday, 24 February 2013

A middle-way solution to the scandal of the buy-to-let 'racket'

The Guardian's Patrick Collinson has penned an interesting piece on buy-to-let and its capacity to damage the chances of first-time house buyers to afford a first home. He asks why building societies, with their history of helping people purchase a home, are now more interested in the quick profits gained from lending to landlords:

"When a loan is granted to a landlord, it effectively means yet another property is removed from owner occupation.

It doesn't help that buy-to-let remains unregulated, with loans calculated on a cheap interest-only basis (with tax benefits thrown in), while today's first-time buyers have the full force of post-financial crisis regulation dumped on them".

As this blog has argued, it is precisely this issue of a minority swallowing up multiple homes that a Government one day soon has to confront. Collinson suggests a clever 'middle-way' solution, which would stimulate house building, control the frankly ridiculous costs of property in the south-east of England and avoid claims of a 'socialist' attack on aspiration that will inevitably come from the right-wing media.

His solution would be to restrict buy-to-let mortgages only to the construction of new property. This would avoid the current scandal of those in possession of multiple homes from hoovering up existing housing stock and stimulate new house building.

It would also restrict the explosive growth in private rental costs that make more and more of London unaffordable for tenants. There is no doubt, though, that even this reasonable suggestion will be fought tooth-and-nail by a small minority who gain a great deal from maintaining the status quo.

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