DON’T blame landlords for the housing crisis, Landbay’s chief executive John Goodall has said, pointing out that they have proven to be an “easy target” politically.
The cost of housing is proving to be too high for many first-time buyers in the UK with prices rising faster than earnings.
“However, this is not a recent phenomenon but has been the case for the last 40 years,” Goodall wrote in a blog post on the buy-to-let lender’s website on Thursday.
“To lay the blame at the doors of landlords is simply not credible. Rents have been rising broadly in line with inflation and so the cost of renting has not risen in line with the cost of buying.”
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The comments came after an applicant for a software engineer role at Landbay withdrew from the interview process.
The applicant had been worried about working for a BTL lending business as he felt the industry prevents first-time buyers getting on the housing ladder.
Goodall pointed out some of the factors that make getting on the housing ladder difficult – tougher affordability tests, higher student fees, and low interest rates.
“[The mortgage market review], student fees and low interest rates cannot be blamed on buy to let landlords, but unfortunately landlords have politically proved to be an easy target,” he said.
Affordability tests are now tougher than they were in 2014 and the prevailing low interest rate environment makes saving for a deposit more difficult than in previous years.
“Buyers can typically borrow less than they could 10 years ago and thus deposits need to be bigger,” he wrote. “Graduates are leaving university with much more debt these days, which also impacts the ability for young people to save.”
Labour markets have become more flexible and people move jobs more frequently than they have in the past, Goodall said, and having access to the rental property market is essential for economic mobility.
“Do you believe that we need some rental housing stock in the economy? If this did not exist, people would be restricted to working where their parents live (and remaining in their parent’s homes) and migration would virtually be impossible,” he said.
Finally, he pointed out that whether people believe that rental property should be provided by the private or public sector, there are around five million rental properties in the UK. With an average cost of £200,000 that would be an approximately £1trn cost to the taxpayer to provide an equivalent service.