The property market in England has turned. No more it would seem can house owners have an asset which ‘makes money’ while they set back and do nothing.
So that is bad news for buy-to-let entrepreneurs who in the last decade have borrowed money at low rates to buy a portfolio of houses which they can subdivide if necessary and then rent to the poor and the young. The rent income more than covered the costs of the mortgages and maintenance, while the fixed asset, the houses, increased in value. Indeed, this form of profiteering was almost self-perpetuating as the demand from buy-to-let spivs helped drive up house prices forcing those who could not buy property into the private rented sector.
New Labour in the past decade has been quite happy to allow the buy-to-let entrepreneurs cream off the wages of the young and the poor. Many middle class people saw the purchase of a second or third house as a short cut to pension provision. But now with house prices and rents falling they are starting to lose money. New Labour’s first instinct, however - as demonstrated over inheritance tax and the twenty percent tax rate- is always to pander to the needs of ‘middle England’. So when repairs and maintenance don’t get done and the supply of private rented housing dries up, the victims need not turn to Gordon Brown for help.