Letting agents and landlords are absorbing Labour’s latest policy on the private rental sector - to give councils the power to ban buy-to-let investors from buying new-build property in designated "housing growth areas".
In these areas, authorities would be able to give priority for more than 50 per cent of the homes to first-time buyers for the first two months after the homes are completed.
They would also be able to restrict the sale of these homes to stop buy-to-let investors from purchasing them.
The announcement, made by party leader Ed Miliband in October, follows five earlier policies aimed at what it calls 'reforming' the private rental sector:
the introduction of rent controls
mandatory longer-term tenancies
restrictions on tenant evictions
a ban on upfront fees
a compulsory register of landlords
Many landlords and rental sector analysts say that the new buy-to-let 'ban' would simply drive investors to buy older homes in the same areas, which would still cause upward pressure on prices and thus defeat the main point of the scheme.
Critics such as the Residential Landlords Association feel the policy has been driven by concerns about foreign buyers purchasing new homes in central London and then leaving them unoccupied, a situation which is not relevant anywhere else in the country. “Today’s report falls into the trap of being too focused on the capital to the determinant of the rest of the country. We need a one-nation housing policy, not a one-London one”, said RLA Chairman Alan Ward.
Industry experts feel that restricting investors from purchasing new-build homes will limit investment in private rented homes, an increasingly-important and growing sector of the housing market, which has in fact provided more than 60% of all new homes in the last 30 years.
The policy appears to derive from (and also perpetuates) the myth that renting is somehow inferior to home ownership, and that buyers have to be ‘protected’ from landlords who would otherwise buy up all available housing in certain areas. Yet with houses becoming ever more unaffordable for buyers, it would seem to make more sense to support renting as a viable long-term option, as it is in many European countries.
Any restriction on the supply of a commodity, whether it’s coffee or concert tickets or property, is bound to increase prices, so it’s difficult to see what benefit this could offer to tenants looking for affordable homes to rent.