Green Party leader Natalie Bennett has come under fire after she attacked the private rented sector – and in particular, buy-to-let landlords whom she blamed for helping to cause the housing crisis.
She cited very high returns for landlords in last Thursday night’s television debate between the opposition leaders.
She said that there had been a 1,400% return for buy-to-let landlords since 1996.
But the producers of the report to which she referred – the Wriglesworth Consultancy and lenders Landbay – suggested that the calculations and methodology involved were far more complex than she had portrayed.
John Goodall, CEO of Landbay, said: “Natalie Bennett is absolutely right on one point. Britain is suffering from a dire lack of new homes.
“But to solve that we need more politicians to offer real solutions, rather than just aggressive rhetoric.
“Since 1996 there has been an unprecedented rise in house prices, due to a long economic boom and an even longer-term decline in the rate of house building. Landlords’ interventions have been vital in mitigating this.
“While house prices have risen by 200% since 1996, rents have seen a cumulative increase of only 62% in the same time frame – or only one third the rate of house price growth.
“That would simply not have happened without the phenomenon of buy-to-let. Meanwhile, home ownership in the UK is still far above levels in continental Europe, where society has not broken down, and overall inequality is often lower.
“Buy-to-let is not broken – it’s an evolving part of the solution. Tenants need buy-to-let lending as much as landlords – and with peer-to-peer lending, normal people can take the place of banks in the process with as little as £100.
“Moreover, prospects for our next generation are not set in stone. If buy-to-let returns are to be lower over the next 18 years than the historic figure quoted by Natalie Bennett, this will be because of deep structural reform to supply more homes.
“And attacking the private rented sector is hardly useful in that serious struggle for reform.
“If our leaders really want to solve the UK’s housing problems, they should have a more grown-up debate about getting homes built, instead of fighting straw men and misrepresenting statistics.
“Natalie Bennett offered no solutions, just a cruel caricature of the very people willing to drive investment into housing.
“Demonising landlords is unfair, unproductive, and a dangerous game that
Comments (5)
Ms Bennett merely demonstrates her lack of grip on understanding the housing crisis as do many politicians who are just vote seeking using emotional rhetoric.
It is really quite simple and basic economics: Supply and Demand. The fact is we have had hundreds or thousands of new people come to the UK and they need somewhere to live. This drives up prices as they compete for accommodation. If government want, need or allow such sudden changes they must provide the housing and infra-structure to support it. Those like Labour, The Greens and Lib Dems are demonising the PRS do so merely to BUY VOTES by playing on the emotions of those who do not understand basic market forces. The politicians have created the present situation and blame others for their mess.
I know the theory but I also know the reality, I have been the repossessing agent on two of these pyramid portfolios. Voids, arrears, charges, stamp duty, repairs, fees , tax etc all have to come out of an apparent yield. Legitimately getting the second 25% deposit is the hard bit and it is the honesty bit that defeats many who try.
Robert, that is what the report showed. But it assumed 75% LTV, BTL mortgage and when there was enough funds from rental income to support another 25% deposit then an additional property would be bought. Again at 75% LTV and so on. Returns are enhanced as you know because the growth is on the asset not on the investment. Once into multiple properties then it quickly becomes significant. It’s a report worth reading, the methodology is fair. And of course she never went into the detail otherwise everyone would become a landlord.
The compound calculations in those reports aren’t correct. An investor would be very well advised to talk to an Agent before attempting to build a portfolio, things aren’t quite as easy as that report suggests.
She is simply trying to prove she is qualified to be an MP- she does not understand the subject or maths!
I think it is wonderful how the people who spout all this gufferage and the journalists who publish it are somehow fearful of engaging with anyone who points out they are talking rubbish.
1400% return in 19 years is compound average 14.9 % growth per annum, can Natalie Bennett please explain where exactly that return is possible anywhere in the UK when the land registry figure at best for the same period show 436%.
Genuinely she is either making it up Shelter style or she doesn’t know how to use a calculator.