Former MPC member says government approach to the PRS is “incoherent”

by Property 118

0:01 AM, 11th September 2019
About 6 days ago

Former MPC member says government approach to the PRS is “incoherent”

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Former MPC member says government approach to the PRS is “incoherent”

THE Government’s approach to the private rented sector is “incoherent” according for a former member of the Bank of England’s Monetary Policy Committee (MPC).

David Miles, now a Professor of Financial Economics at Imperial College London, has argued that contrary to the Government’s stated aims, there are “few signs” that tax increases on the sector have benefited those hoping to become homeowners. He argues that they are, meanwhile, “left in a rental sector with reduced choice and where rents are likely to be higher as supply gradually shrinks.”

Since 2015 the Government has introduced measures to restrict mortgage interest relief on the private rented sector to the basic rate of income tax and imposed a stamp duty levy on the purchase of new homes to rent out.

In his exclusive article for the Residential Landlords Association Professor Miles attacks the Government’s approach which has sought to cut investment in the rental market to support aspiring first-time buyers. He argues that such buyers “are hardly helped by squeezing the supply of rental property and driving rents up.”

He goes on to say that there is nothing “intrinsically wrong with people being in the rented sector for an extended phase of their life. We should want to avoid a situation where people feel pressurised into taking big mortgages relative to their income early in life because the rental option is so poor.”

Professor Miles goes on to conclude:

“In a world where house prices might be consistently higher relative to incomes than in the past we might naturally expect the period in which people are in the rented sector is longer. And there are good economic reasons for believing that in a country with a rising population and where real incomes tend to increase over time house prices might well rise at least as fast as incomes. To have then introduced measures that reduce the supply of rented property is perverse.”

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

“Professor Miles hits the nail on the head. Choking off the supply of rental properties does nothing to help aspiring home first-time buyers who need somewhere to live now.

“It is time to change tack and recognise that we need more homes to rent as well as to buy in order to meet growing demand and have policies that support investment.”



Comments

Dennis Leverett

9:05 AM, 11th September 2019
About 6 days ago

Why can't the Government and all "comrades" see what is just pure basic economics, it beggars belief. A 5 year old child could understand this. Apart from the odd dodgy Landlord we are doing them a favour and taking the risk but they just can't see it. Pulling out hair argh !!!!!!! My own MP won't get my vote this time as he can't see it either, like talking to brick wall and got away with fiddling his expenses, reason " not worth pursuing" even though it was £100's. If I'm late with my Tax return or vat returns I'm in big trouble.

Ian Narbeth

12:37 PM, 11th September 2019
About 6 days ago

When we have got Brexit sorted perhaps the RLA can send a copy of David Miles' article to every MP.
MPs of all hues seem to have it in their heads that the more they attack and punish landlords, the more they regulate them and make their lives hell the better it will be for tenants.
They need to be disabused of this nonsense.

Neil Patterson

11:03 AM, 12th September 2019
About 5 days ago

Also see Professor David Miles full RLA blog "The war on the rental sector has no winners"

>> https://news.rla.org.uk/blog-the-war-on-the-rental-sector-has-no-winners/

Whiteskifreak Surrey

11:23 AM, 12th September 2019
About 5 days ago

Reply to the comment left by Ian Narbeth at 11/09/2019 - 12:37
And when do you think "sorted out Brex**IT" situation is going to happen? Does not seem any closer, Boris the LLs friend did not materialise and Labour complete disaster is looming...

Jim S

19:03 PM, 14th September 2019
About 2 days ago

I love the fact that people have now started to refer to the attacks on landlords as a "War on landlords" even the RLA have used the phrase a war on landlords! The government need to be publicly shamed for their actions against the PRS in particular the immoral tax attacks. I have suggested this to the RLA/NLA many times that what is needed is a nation wide shame campaign to truly highlight the immoral practices of the Government. If rogue landlords are to be called criminals then the immoral MP's who allow retroactive taxation should also be called criminals and referred to as criminals in all communication and newspaper reports that the RLA/NLA produce.


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