‘The road to servitude is paved with government intentions’ as economist Friedrich Hayek might have said. His prophetic ideas are pertinent today, where we are on the cusp of a government ‘initiative’ to ban tenant fees.
As always with bureaucratic interference, a busybody’s desire to help the ‘vulnerable’ ends up as the economic version of playing the piano with boxing gloves, where the cure can often be worse than the ailment.
Any ‘fule kno’ in response agents will raise their fees, which are usually around 10%, to landlords. The inevitable consequence will be higher rent levels for impoverished tenants.
Presently, landlords are being forced to offload their investments thanks to meddlesome tax changes that include SDLT (an extra 3%) for the buy-to-let investor and less mortgage relief at the higher scale of income tax. This only serves to constrict the supply of rental property in the marketplace.
This is particularly apparent in the Capital, where there are more people choosing to rent than to buy. The increase in demand will lead to higher rental prices, further exacerbated by this government’s new policy.
And let’s be clear, not every landlord is a scoundrel. Some are perfectly well intentioned, decent people who have become disillusioned with the government’s changes to private pension schemes and understandably want to protect their family’s future by investing in the UK housing stock. In doing so, they increase the supply of private rental property for tenants, who are only renting through necessity and the more supply, the lower the rents for the available demand.
It is imperative that the government boosts the housing supply, by fair means or foul. David Cameron’s PDR (Permitted Development Rights) was a welcome innovation, allowing developers to circumvent the sclerotic and glacial planning process and in order to build private homes away from the intrusive vice like grip of local councils.
As if it were possible for the Labour Party to descend further into hate-fuelled stupidity, they are proposing to bring this to an end, demonstrating just how out of touch and incompetent they will be if they were ever to gain the reins of power.
The real answer is a meaningful, grass-root reform of the planning process, which can only come about by ridding this important procedure of petty local politics.
Councillors are crowd-pleasing publicity seekers, obsessed with grovelling to their constituents in advance of the next local elections. Try and get a planning commitment from them before a local election and you’ll struggle.
Letting agents are not exactly high on anyone’s popularity list. However, like dung beetles or sewage workers, they do perform a necessary function. The estate agency world is currently on its knees, how much more punishment must they take from this Tory government?
This is on top of former Chancellor George Osborne’s foolish tampering with the Stamp Duty Escalator, which has created a DIY recession in residential property values. It has also served to suppress UK retail spending, which fuels economic growth; taking another sledgehammer to the lettings market is the last straw.
These vexatious politicians have forgotten that a reasonably buoyant residential property market is essential to healthy UK growth. The government should not constrain demand but instead, increase the housing supply for both the rental and sales markets and these draconian measures will hit the vulnerable just where it hurts most, in their pockets.
Note to the Housing Minister; stop this interfering and meddling; you are not doing consumer any favours. Isn’t there something else that you can do to busy yourself, like solving the Brexit problem?