Of course, her ideas about how to make the world a better place were entirely misguided, but the derision the quote attracted was to some degree hypocritical. Since the recession, much of the language of reform has been based on the idea of the rich ‘them’ and the poor ‘us’.
But while high street businesses received universal sympathy as they were – outrageously – attacked, the financial services sector has had to fight much harder to garner positive public sentiment.
Of course, multinational financial institutions won’t face cashflow crises when required to replace the glass frontings of their branches, but their capacity to have a positive impact on the economy is just as tangible as that of the businesses attacked during the riots.
This is why I was surprised to read an editorial this week calling for more stringent regulations for landlords. Greater restrictions on landlords would, in the long run, hurt everyone involved in the property market.
The rationale for greater restriction is that it’s unfair rents are uncontrolled and tenancies can be terminated with only 6 months’ notice when so few people can afford to buy a house.
The argument runs that greater stability would allow tenants to make the best of a bad situation in which overpriced housing and reluctant lenders are preventing first-time buyers from getting their feet onto the housing ladder.
As they say in Scotland, pish. The experience of baby-boomers has created a belief everyone has the right to own their home.
This, rather than any economic analysis, has led to the widely held sense that it’s unfair on today’s would-be home buyers that they cannot think of purchasing a house until middle age – if at all. In a working rental market, where there is an adequate supply of property, there would be little more inherent uncertainty for tenants than for owners. So why is owning so important?
The reason for today’s soaring rents is that there are too few landlords, meaning very limited supply of rental housing. In the UK only 16% of homes are in the private rental sector, while in Germany, the figure is 60%.
The UK suffers from a seemingly chronic lack of rental sector accommodation. This is the main reason why rents have been rising to record highs and increasing the number of landlords is the best way to redress the balance and bring the cost of renting in line with that of buying.
Mortgage lenders are doing their bit to boost supply. In the last year Buy-to-Let lending has increased 46% – more than 13 times faster than lending overall. Lending to landlords represents the highest proportion of gross lending for three years.
Lenders’ current confidence in the buy-to-let market is based on the consistent growth of yields over the last eight months and the fact landlords tend to have larger deposits than first time buyers. It is in nobody’s interest to put further pressure on landlords.
Doing so will perpetuate the inadequate supply of accommodation and force lenders to reduce their activity in a Buy-to-Let sector hamstrung by red-tape.
