14:57 PM, 20th October 2018, About 5 years ago 4
Last year I described how Patrick Collinson had misunderstood two reports with big numbers in them:
This week he has blindly quoted the press release for a report – with small numbers in it – which was designed to deceive policymakers: Click here
Collinson wrote: “Warnings by landlords that taxes on buy-to-let would cripple the property market, driving down supply and pushing up rents, have turned out to be entirely hollow, according to research by campaign group Generation Rent.
“It found that since the ‘bombshell’ introduction of taxes on buy-to-let landlords in George Osborne’s 2015 budget, rents have fallen in real terms.
“Warnings of crippling rent rises have been confounded. In fact, real rents (adjusted for inflation) have fallen by 2.8% in the same period. There is therefore no evidence that a reduction in the supply of rented homes has pushed up rents,” said Dan Wilson Craw of Generation Rent.” Click here
If the words Dan Wilson Craw and Generation Rent (GR) did not put him on his guard, the words “adjusted for inflation” should have. So should the claim that the PRS is not subject to the Law of Supply and Demand.
A journalist, or someone familiar with economics would have asked himself what the unadjusted figures had been. He might even have gone as far as googling that thought, in which case he would have found this source: Click here
At the end of section 5 he could have downloaded a spreadsheet relating to England. This would have shown him that rents have been rising consistently.
Collinson wasn’t quoting Craw’s report, he was quoting GR’s press release written by Hannah Slater. How do I know? Because the report says 3.2% and the press release says 2.8%.
The report said:
“But once the stamp duty surcharge was in place and the private rented sector began to shrink, real rents actually stopped rising, and broadly flatlined until January 2017. At this point, three months before restrictions on mortgage interest relief began to be phased in, real rents started falling again. As of August 2018, they have fallen by 3.2% in real terms.” Click here
The press release said:
“Then, in 2016, the Government introduced tax changes for buy-to-let landlords designed to level the playing field for first-time buyers – the stamp duty surcharge and withdrawal of higher rate relief on mortgage interest. The size of the private rental market has already fallen by 111,000 households, and first-time buyer numbers are up. Those first-time buyers who snapped up properties previously owned (or simply not bought) by landlords no longer need rented homes, so the balance of supply and demand remains constant. And rents have not risen in real terms, but have in fact fallen by 2.8% since the surcharge came in.” Click here
Craw’s report and the divergent press release were referring to the change in rents since the 3% Stamp Duty surcharge on second homes was introduced in 2016 after being announced by George Osborne in November 2015. Hannah mistakenly wrote that interest relief began to be phased out in 2016. GR seem to think that this was such a shock to the system that landlords would have tried to increase rents!
Collinson should have noticed her error (phasing out did not start until a year later). He should have realised the significance of her words “since the surcharge came in”, referring to the use of the word earlier in the paragraph.
However, he didn’t. Possibly blinded by anti-landlord prejudice, he claimed that GR were referring to the restriction in mortgage interest relief which Osborne announced in July 2015, and linked to that in his second paragraph. Click here
The 3% surcharge cannot be called a shock to the system, but the tax on mortgage interest certainly is. However, this did not begin until April 2017, and the first tax returns applying it are not due until next January, so many landlords are not yet aware of it.
The upshot is that a deceitful figure for the change in rents since the extra stamp duty came in has been used to ridicule predictions of the rent increases that will occur because of Osborne’s lunatic tax.
Cue glee among the anti-landlord brigade on the Guardian website. The sophistry of Dan Wilson Craw and the carelessness of Patrick Collinson have combined to create the perfect lull for them, but dark clouds are gathering.
Patrick Collinson is money editor of the Guardian and the newspaper’s personal finance editor. Amazing.