Originally posted 4 December 2019 on ‘Marginal Seat’ (a site I have now redirected)
In the UK the Conservatives under Margaret Thatcher introduced a Right To Buy for tenants of Local Authorities. Tenants could buy their Council houses at a discount reflecting the years they had spent paying rent.
Property prices rose in the years following, and at the same time the Government loosened the regulations around who could borrow on credit and for what purpose.
When tenants (now property owners) fell into credit card debt, the way out was simple – buy another property or remortgage with a larger loan.
When property prices fell and people lost their homes, people with more borrowing power bought them up to rent them out, assisted by tax incentives on mortgage repayments.
After some years the Government removed the tax relief on ‘Buy To Let’ mortgages, with the result that those properties were snapped up by people with even more borrowing power or by still richer people with cash, looking for somewhere to invest.
An article from 2017 in the Guardian, under the title ‘Four in 10 right-to-buy homes are now owned by private landlords’ referred to Freedom Of Information requests sent by Inside Housing to local councils in England. A 2015 article from Inside Housing reported that the responses from 91 councils “show they have sold a combined 127,763 council flats and maisonettes since the Right to Buy was introduced in 1980. Among these, 47,994 leaseholders are registered as living away from the property a strong suggestion that they are renting it out privately. This means 37.6% of the council homes which were sold off at a discount in the hope of fulfilling a homeownership dream, are now back in the rental sector. Just for much higher rents.”
The result of forty years of Government policy has been to widen the gap between the haves and the have nots – and create a new feudal class for the 21st century.
In short, the arc of progress has been to bring to fruition the intended consequences of a long-term plan masquerading as unintended consequences.
Beware the apparent unintended consequences of Government policies that are in fact the fruition of a carefully laid out plan.
Update 8 December 2019
Article by Adam Williams in the Telegraph on 7 December 2019
Buy-to-let landlords plan to leave the market in huge numbers next year as new analysis suggests that more than 100,000 rental homes have been sold since a punishing tax regime was introduced.
Investors have faced stringent restrictions since April 2017, when the Government started to limit the amount of mortgage interest and other costs that could be offset against tax. In some instances landlords face a marginal tax rate of more than 100pc.
These new rules are being phased in until 2021, but thousands of landlords have already decided to throw in the towel. Analysis of mortgage transaction data by Savills, an estate agency, shows that 103,900 more buy-to-let homes have been sold than bought since the new tax regime was introduced.