Whenever secure tenancy and rent control are discussed in the media it’s as if we can simply control our way back to enough houses for people to live in. Stopping landlords making empty houses into homes by restricting their profit is hardly going to home more Britons. What Britain needs is more houses to be constructed and an end to the dictatorial planning legislation that currently crushes growth in the housing market.
Secure Tenancy Ends Lending
There’s a big reason why the buy to let market doesn’t really exist in Europe – under a secure tenancy system similar to Germany where tenants can remain in a property for as long as they like (subject to not smashing it up or failing to pay rent) lenders cannot operate effectively. How is a lender supposed to protect itself from delinquent landlords if it cannot take possession of a property and remove the tenants (in an orderly fashion, usually after a more reasonable notice period than any landlord gives) in order to achieve a sale and the repayment of the mortgage? The answer is simple: they cannot do so.
It’s understandable why so many young people are currently extremely frustrated with their inability to buy while landlords hoover up every profitable property in London. It’s understandable why they resent the rich getting richer. Turning this frustration against landlords is targeting it at the wrong people. Those who are failing the young people of today are in Government and have failed to see that getting Britain building again is the best solution. Building more homes naturally increases the competition between landlords, reduces demand and keeps prices stable. Allowing a huge shortage causes boom and bust which doesn’t benefit landlords in the long term and causes massive hardship to tenants in the short term.
Rent Control Fails Everyone
Whatever those without property would have us believe, nobody benefits from controlling either house prices or rent. Increasing the value of our housing stock forces people from overseas looking to invest in the UK to pay more. This brings money into the UK and makes British citizens wealthier whether they own housing stock or not. Not only that investing in property or even buying your first home to live in is much more appealing if there are significant capital gains to be had over the long term. Eradicating these gains by restricting the profits of landlords neither encourages development and improvement of housing stock nor improves the wealth of those who are buying their first home.
It’s time we faced up to the challenges of our growing population in Britain and got building again and stopped trying to legislate our way into cheaper houses despite a dire shortage of supply.