Writing for Property Week, Ashley Osborne, head of residential, Colliers International, says that given the precarious state of the housing market, policymakers scapegoating of landlords, overseas buyers and property developers is counterproductive.
“The critical state of the UK’s housing market is widely recognised and debated by policymakers and yet policy to date has largely hindered the creation of new supply. Instead of addressing this fundamental problem, many consider the government’s actions on the issue in recent years to be scapegoating, says Mr Osborne.
“Landlords, overseas buyers and developers have all been at the receiving end of poor policy decisions, but these groups must be part of the solution if our industry is to work together to solve the supply crisis in any meaningful way,” he continues.
Mr Osborne cites tax disincentives introduced in the last few years as discouraging buy-to-let landlords, forcing them to withdraw from the market; a large decline in the number of buy-to-let mortgages being taken up in the last two years would appear to prove the point.
His argument goes that the increased tax burden on landlords is now depriving developers of “a key source of demand” and restricting their capacity to build. In his view the government should instead be incentivising buy-to-let landlords to return to the market, “easing the supply of rental properties and cooling the overheated market.”
Foreign investors also, in his view, are continuing to suffer from the government’s “ill-founded belief that they snap up expensive central London new-build flats and leave them empty” In fact, he believes, foreign investment stimulates growth.
Pre-sales or off-plan sales are an important part of the development process, kick-starting the market, but these sales result foreign buyers and landlords, not owner occupiers. This is a vital component that makes schemes viable argues Mr Osborne.
Citing a recent London School of Economics (LSE) report that found that “almost all of London’s large residential development sites have benefited from overseas investment to get them started and speed up development,” he says:
“There is a widely held misbelief that international buyers and buy-to-letters squeeze out other buyers, rather than helping to create a more fluid market. But if these types of buyers withdraw and demand contracts at the top of the chain, the effect will be felt below – measures designed to hit the wealthy end up hurting those further down the property ladder. Without overseas buyers and buy-to-let landlords, the effect is a supply crisis, which becomes compounded when fewer homes are built as a result.”