I put up some comment upon stats only on Friday, and thought I’d lay off the heavy stuff for a while now – it’s becoming a bit of a record stuck in a groove.
But, sorry, there was more to come, from yet another politico weighing in with a view that is unsupported by the facts. Now, don’t get me wrong, I am entirely agnostic where politicians taking aim at landlords is concerned – they all use blunderbusses rather than aim accurately, whatever their hue. I’ve already commented on George Osborne’s ill-conceived tax attack, so it’s perfectly reasonable to diss the latest view, this time from Vince Cable spouting populist nonsense (as an aside, Labour’s previous performance in housing management was nothing to write home about…well done on Home Information Packs btw, Yvette Cooper).
So, what’s Vince said? This week, at the Association of Short Term Lenders Conference, he said there are “worrying signs” that Britain is “reliving the bubble of the pre-crash” and warned that the financial crisis of 2008 had been an “economic heart attack”.
Noting that the figures last week from the Bank of England were one of the worrying signs (as I noted previously “buy-to-let lending has risen by 40% since 2008, compared with a 2% rise for owner occupation”), LibDem Cable opined that the property market is unaffordable to most people in the country, with price rises “fuelled by buy-to-let activity and lack of supply”.
So far so bandwagon.
But, here’s some facts, from Bank of England staff commenting on some of their research into Buy-to-Let:
- Buy-to-Let investors do not push up the prices – they in fact buy at a discount, based on empirical (and quite impressive!) research across the whole period from quarter 1 of 2009 to quarter 1 of 2014. For equivalent properties, BTL investors pay 1% less than other buyers
- They buy a tiny bit more speedily – between 3 to 10 days depending on whether using cash or a mortgage. So for some vendors, after a period of time a BTL investor naturally becomes more attractive
- BTL investors are more likely to pay cash; about 50% of BTL purchases are cash (vs. 70% for all property transactions), but this is robust across all different types of property (flat, semi, detached, etc), year, and location. So it’s not as if BTL is targeted at pricing out low-end first-time buyers
- Oh, and London flats are heavily fuelling transactions in general – there’s a whole different world of experience for investors in the East Midlands
Their conclusion?: “In a market where properties take a long time to sell, BTL investors can play a helpful role as buyers of last resort and contribute to market clearing by accelerating transactions. In a market where prices are already going up, BTL investors obtain lower discounts and could put additional pressure on property valuations”.
I read this as BTL taking heat out of the market, not putting it in…