Onward Report Riddled with Errors says RLA

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Onward Report:

A new think tank is fundamentally wrong in its analysis of private rented housing and the number of buy-to-let mortgages is falling, not rising.

In its first report, focussed on housing, the Conservative supporting Onward, claims that at the end of 2017 buy-to-let lending was above the 2007 peak. In fact new buy-to-let lending for house purchases has fallen from over 183,000 loans in 2007 to just 74,900 in 2017, a fall of nearly 60 per cent, according to figures from UK Finance, formerly the Council of Mortgage Lenders.

The total number of buy-to-let mortgages, including re-mortgages, also fell from 339,000 in 2007 to 227,000 in 2017, a drop of a third.

The private rented sector is actually shrinking with the Government’s own statistics showing that the number of private rented dwellings in England fell by 46,000 in the year to March 2017.

The report argues that landlords are taxed more advantageously than homeowners. This is not the case according to the respected Institute for Fiscal Studies which said following tax rises imposed on the private rented sector in 2015: “The tax system is not, and was not, even before the recent changes, more generous to people buying to let.�

On the back of its false assertion, Onward calls for further tax increases to reduce investment in new homes for private rent.

It argues that if the country had kept the ratio of privately-rented to privately-owned homes the same between 2000 and 2015, it would have ended up with 2.2 million more homes in owner-occupation.  This ignores the question of whether all of these households would have been able to afford a home of their own, especially as house prices rose by 154 per cent over that period.

With another report today saying that it now takes a single, first time buyer an average of ten and half years to save for a 15 per cent deposit for their first home, the RLA argues this is leading to increasing demand on the private rented sector and to take action now that would further reduce supply would just make finding somewhere to live more difficult and more expensive.

David Smith, Policy Director for the Residential Landlords Association, said:

“Today’s report is riddled with errors and fails to address the fundamental point that we need more homes to rent, not less.

“Rather than coming out with ideological assaults on the private rented sector, we need to reform tax so that it encourages the development of new homes to rent and longer tenancies so that the sector can adequately provide the pathway for tenants to go from renting to home ownership.�

• The Residential Landlords Association: The home for landlords
• The RLA represents the interests of landlords in the private rented sector across England and Wales. We are home to over 50,000 landlords nationwide, with a combined portfolio of over a quarter of a million properties. A growing community of landlords trust and rely on us to deliver day-to-day support, expert advice, government campaigning, plus a range of high-quality services relevant to their needs.
• It campaigns to improve the private rented sector for both landlords and tenants, engaging with policymakers at all levels of Government.  Our vision is to make renting better for everyone involved in the private rented sector.
• Paul Johnson, Director of the Institute for Fiscal Studies gave evidence to the House of Lords Economic Affairs Committee on 8th March 2016 as part of its inquiry into the housing market. The transcript can be accessed here

He told the committee:

“If you buy to let, you pay income tax on the return and capital gains on what comes out when you sell it at the end, which is not the case for owner-occupiers. The current system is clearly more tax favourable towards buyers and owner-occupiers than it is towards buy-to-let landlords and renters. The tax system is not, and was not, even before the recent changes, more generous to people buying to let.�

• The Government’s latest Dwelling Stock Estimates for England can be accessed here It notes that between March 2016 and March 2017, the private rented stock decreased by 46,000
• RLA PEARL’s analysis of buy to let mortgage data can be accessed here
• Nationwide publishes its UK House Prices index since 1952 and here

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