Inheritance tax, HS2 and (shudder) Diane Abbott – do we need any further proof that the inmates of ‘Westmonster’ are a blight on our economy and sometimes, our very existence? To echo the political radical and American Founding Father Thomas Paine (1737 – 1809) “Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.”
Nowhere is this more evident than in the property market. Successive Chancellors (we’re looking at you Gordon Brown and George Osborne) have monkeyed around with the market as if it was their personal Lego set and never mind the consequences. To paraphrase Herbert Feigl, (a 20th Century philosopher who was significantly cleverer than those Chancellors) it’s “the disease of which it should be the cure.”
Gordon Brown and his nu-Labour acolytes were motivated purely and simply by spite. How dare the middle classes bolster their ever-diminishing pensions by making a profit from the housing sector? And who can blame these home-grown buy-to-letters? Brown was forever putting his greedy paws on other people’s wealth, in the form of taxing pensions and notoriously, flogging the UK’s gold at a Poundstretcher price. Genius!
Eying Up Tax Relief on Buy-to-Lets
The Labour regime eyed up tax relief on Buy-to-Let mortgages and slowly removed it since the Labour government at the time thought that this would eliminate the incentive to play fast and loose with the housing sector.
In 2015 the economic and intellectual Titan, Mr. Osborne, continued with this punitive treatment and imposed a 3% Stamp Duty surcharge that haunts us to this day. He encouraged private landlords to sell their stock, thereby reducing the numbers of private rental property available in the marketplace. As everyone knows, this reduces supply and pushes up rental prices. The catastrophic domino effect forces more people into renting or even worse, living with their parents. The difficulty of accumulating a deposit excludes them from any chance of property ownership, unless it’s a garden shed.
One look at Zoopla shows 301 properties for sale in a diddy tranche of the NW11 postcode alone. The Your Move site is similarly awash with sales.
Landlords exit stage left
Landlords are exiting stage left and who loses? The hapless tenants, who are paying extortionate rents on a diminishing supply. Socialism not only makes you poorer, it can also make you homeless. The average rent on new rentals rose by 9.1 per cent in May compared to the previous year, according to according to an institutional estate agent. Property portal Rightmove reports that the average monthly rent hit £2,500 in London and a record high of £1,190 for the rest of the UK.
To add to the deleterious effect, some dim bulb at the Treasury thought it might be a jolly jape to hoick mortgage rates up to circa 6%. What’s worrying is that as well as the Cost of Public Sector Crisis, we may be looking at a Repossession and Homelessness Crisis. And therein lies the problem with this clobber-the-private-landlord fetish – it destroys free markets and makes it worse for everyone.
Struggle to build new homes
Successive governments have always struggled to build enough homes to meet the demand of the country. We are still 33% short of what we need. and now that the comedy double-act of Sunak and Hunt have kicked away the quotas, it seems this figure will never be achieved.
Meanwhile, the Tories are reluctant to quash nimbyism and have stifled the much-needed reforms of the planning process. It’s anybody’s guess as to how they square this circle, but I suspect that they don’t know either.
The fanatical socialists of the Labour party will no doubt cook up a fetid (probably vegan) stew of well-meaning but misguided policies to ‘protect’ tenants from overbearing landlords. Like the arsonist putting out the fire with ethanol, this won’t work and will only exacerbate the lack of supply even further.
Beware. The Four Horseman of the Property Apocalypse are saddling up and ready to go.