A Tory MP has called for the Bank of England’s Financial Policy Comittee to intervene in buy-to-let “as soon as possible.
Treasury Select Committee member Chis Philp said that action was necessary to stop buy-to-let adding “fuel to the flames of house price inflation”.
He was speaking as Bank of England governor Mark Carney appeared before the committee.
Carney said that the Treasury has already committed to a consultation with the Bank’s Financial Policy Committee on its recommendation to be given power to change buy-to-let lending policy, should the sector pose a risk to the overall housing market’s stability.
But Paul Smee, director general of the Council of Mortgage Lenders, yesterday said that buy-to-let was being falsely cast as the villain of the housing market.
He said the real problem was housing supply and that buy-to-let may be “taking too much of the rap for a wider policy failure”.
He said that the current government’s rhetoric is all about home ownership.
Smee said: “Achieving home ownership may get marginally easier, but it won’t suddenly become easy. A lot of people are going to be renting – by choice or by necessity – for as far ahead as we can realistically look.
“And, let us not forget, there are huge swathes of the population for whom private renting is an active choice, not a ‘second best’.
“The private rented sector – and, within it, buy-to-let – is an entirely normal part of the market.
“The relative size and popularity of the buy-to-let market will ebb and flow under different market conditions, just as the flow of lending to owner occupiers will.”
Smee said the physical supply of housing was the crucial factor, and that it was wrong to pit home ownership against buy-to-let “in some sort of artificially drawn battle line”.
He added: “Both tenures – along with social renting – are important.
“When it comes to housing tenure choice, there are no saints and sinners: the name of the game needs to be peaceful co-existence.”
Well said that man!
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He said the real problem was housing supply and that buy-to-let may be “taking too much of the rap for a wider policy failure”…… Yes, along with landlords and agents…….
Build more houses and get rid of the “length of tenancy” restrictions imposed by BTL lenders.
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Wow, some common sense by the Bank of England! The facts are simple; The demand for housing has increased with natural growth and unnatural growth such as unfettered migration to the UK from other countries. Supply has not increased to fulfill that demand. Result rental and sales/purchase price increases. If only the politicians had taken their O level in economics they might be able to understand! All the tinkering and red tape being introduced or proposed is about political ideology not solving problems. James Brokenshire’s immigration checks are about the Conservative’s failure to properly control borders. This lack of control is the prime mover in price increases due to excess demand. You either control demand or increase housing supply.
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House prices are silly money across the country. But there is only one factor to blame. Shortage of houses.
Basic economics, supply and demand. Create more supply (houses) and prices will fall.
I saw an interesting stat the other day apparently the UK has built on less than 3% of the land. I am all for keeping the National Parks and would not like to see it all built over but this country has too many inhabitants and too few homes.
You could change this within a 5 – 10 period. We need another housing boom in building homes.
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