The government’s attempts to muzzle the buy-to-let market and give first time buyers a chance to get on the property ladder have failed and are ‘perverse’, a leading economist and former member of the Bank of England Monetary Committee has claimed.
David Miles, who is a Professor of Financial Economics at Imperial College London, says there are few signs that the Conservative’s tax hikes for landlords since 2015 have had the desired effect.
He also says that instead the rental sector faces reduced choice and that “rents are likely to be higher as supply gradually shrinks”.
The comments are made in a blog written for the Residential Landlords Association, in which he argues that pushing up rents for tenants through reduced supply is unlikely to help first time buyers.
He also argues that there is nothing wrong with people renting later into life than previous generations.
“We should want to avoid a situation where people feel pressurised into taking big mortgages relative to their income early in life because the rental option is so poor,” he says.
“In a world where house prices might be consistently higher relative to incomes than in the past, we might expect the period in which people are in the rented sector [to be] longer.
“And there are good economic reasons for believing that in a country with a rising population and where real incomes tend to increase over time, house prices might well rise at least as fast as incomes. To have then introduced measures that reduce the supply of rented property is perverse.”