Thursday, 3 December 2015

The Zoopla boss and his disappearing homes conundrum

From The Evening Standard:

Zoopla founder Alex Chesterman said the extra 3% on stamp duty for second homes and buy-to-let investors was “not a particularly helpful policy to solving the supply problem”.

He said: “More housing - great. Further taxes on the market - not necessarily great. It may move some marginal supply from the rental market into the sale market but that has negative repercussions on the rental market. You will see fewer rental properties in the private sector... and higher rents.”

He didn't stopp as low as suggesting the extra 3% SDLT will 'force landlords to put up rents', instead he has gone for a variation of the disappearing homes conundrum.

OK, let us accept that at the margin, a few more homes will be bought by owner-occupiers rather than landlords, because the former group are now effectively bidding 3% more than the latter. That is the whole point.

Let's focus on one single one of those homes, the landlord's bid has been turned down and the owner-occupier's bid, being ever so slightly higher, is about to be accepted.

If Chesterman's logic is correct, the owner-occupier should promptly withdraw his offer and allow the landlord to buy the home and then rent it from him, the rent now being ever so slightly cheaper than it was before. This slight rent saving will more than compensate the tenant for foregoing the benefits of being an owner-occupier.

Did he really think that one through?


mombers said...

Surely we want fewer homes in the private rental sector - it offers the worst value in the world (highest rents per square meter). Such an industry should rightly be shut down, like the coal mines

Bayard said...

"Such an industry should rightly be shut down, like the coal mines"

So what do you do if you want to rent a house instead of buying one, then?

mombers said...

I should have been more specific... The 'mom and pop' BTL industry needs to be shut down, it clearly is not serving us very well. If you're renting, it should be from professional, large scale operations, or from social housing.