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Andrew Whitchurch

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The trouble is if you keep the status quo, your tenants will pay anyway. The choice of the tenant is either: 1) Higher rent because interest relief is eroded; or 2) Higher taxation to cover the shortfall from rent relief, essentially to subsidise the acquiring of assets by landlords and in so doing paying for their continued exclusion from the housing market. Also, the weakness in the interest argument is that it is extremely variable. Some landlords will be highly leveraged whilst some will own their properties outright. In the end, they will be forced into market equilibrium. It can't be assumed that interest costs are passed on, because the highly leveraged will be at an extreme disadvantage in the market. Also, given the profitability of the market by some landlords, it could be pointed out that we already have demand pull rather than cost push pricing and this will persist.

From: Andrew Whitchurch 03 August 2017 13:18 PM

The flaw in Duncan-Smith's argument is that he assumes the private rental sector is the only way that demand for housing can be met. In taking this approach, he is attempting to treat a symptom of the UK's housing shortage rather than its root cause. What an awful lot of landlords fail to appreciate is that: 1) Most of their tenants would rather own their own home rather than rent; 2) That it is the role of Government to ensure social order and democracy and not to serve one economic interest to the detriment of another. Government policy in its current form serves the majority who wish to own their own home in that it seeks to address the housing shortage through a series of incentives to build more (e.g. help to buy equity loans, shared ownership) and disincentives to building up property portfolios from existing stock (e.g. higher stamp duty on second homes, tax on investment halfway towards equity with investors in shares and bonds etc). Also, whether they like it or not, this policy serves those who want to own as residents and not those who wish to own in order to exacerbate shortages and increase returns. Government policy also recognises that the letting market is not particularly healthy to the UK's economic strength. It doesn't produce anything and it is motivated by shortages. Pushing investors towards investment in businesses that produce goods and services is much healthier for a sustainable economy and hopefully the government will consider increasing taxation on the buy to let market further in order to fund further cuts to taxes on investments in the securities markets. Buy to let landlords might not appreciate this shift but they need to appreciate that the cost of housing today has become detrimental to the wider economy and the growth in aspirational middle class people forced into renting long term threatens the social order. What we have today might be less convenient than three years ago but without these measures, it would only be a matter of time before Jeremy Corbyn reached Number 10.

From: Andrew Whitchurch 03 August 2017 13:14 PM

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