Recently the Mayor of London responded to a survey that Shelter had run, to try to solve the many housing problems in London, like astronomical rents, unaffordable mortgages and rogue landlords. One of the responses was posted on TalkLondon and reading it made me so cross I wrote a very long comment on the site. I then thought I’d post the comment here as well, as I think it’s relevant for everyone to read, not just the people at the council.
I couldn’t disagree more with the statement that buy-to-let landlords are central to dealing with the supply of new homes in London. They are the main cause of the current problems:
A) They force house purchase prices to artificially high levels, by buying up houses for personal gain and profit, but renting them to those who now can’t afford to buy.
B) This causes more people to be unable to save for mortgages, being forced to pay too high rent.
C) They keep rents artificially high, as well as the house purchase prices, to ensure profit of their “business”.
It’s a sad sight when new housing finishes and soon after the “For Sale” signs go up, they’re replaced by “To Let” signs. We’ve witnessed this recently on Copenhagen Street, where very nice apartments have recently been built, just across from Barnsbury Park. The “To Let” signs have now been up for a long time, as the rent prices are too high for anyone to afford. However, they will eventually be filled, as the housing shortage continues, and this will continue to press the poorest, while the rich (house owners) profit.
I see it as a massive flaw that the housing system has been allowed to turn into a business. It should never have been, and currently it’s hampering the supply of work force to the capital, as well as the ability of people to acquire wealth, and consequently spend it in local businesses. Meanwhile the few who continue to own a growing amount of the housing in London (as well as the rest of the country) are profiting on a business, that not only adds nothing to society, but is taking a lot away, both from the economy (through reduced spending) and from the people itself.
Houses should be for the people who live in them. Rental accommodation should be provided by the council and housing associations. It should never be the norm that most people will pay rent, when they are living in one place for several years. It should be a solution for students, and people who want the liberty to move around easily. It should never be a necessity.
If property ownership was limited to those who intend to live in the houses, we would see a massive drop in house prices, to what would a natural level. That is, a house price would be determined by how much you would pay to live in it, not on how extortionate rents you could get away with forcing on poor tenants. It would mean a massive weight off the majority of people who would suddenly be able to buy, and a massive shift of wealth away from the top few percent towards the rest of Britain.
To make it fair, the shift should be staged, starting with the restriction on purchases of new houses, giving the currently buy-to-let landlords a few years to offload their extra houses.
The current system is broken. It allows few to profit from forcing others into poverty. It needs to be fixed, as it’s holding back the British economy by stagnating personal economic growth while adding no benefits to the system.