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Buy To Let Corporate Welfare

Wednesday, August 21, 2013

Growth In Buy To Let Lending Will Fuel Public Spending On Corporate Welfare Says GMB 

Taxpayers already pay rent to private landlords owning more than 1.5 m dwelling and this latest growth will likely add another 16,000 new claimants says GMB

GMB responded to the report from The Council of Mortgage Lenders (CML) that 40,000 mortgages, worth £5.1bn, were advanced to buy-to-let investors in April, May and June. See notes to editors for report on BBC.

GMB published a study which shows that tenants in 40.4% of the 3.9m private rented homes in England and Wales are in receipt of housing benefit. The figure ranges from 51.5% in the North East to 34.4% in London.

Set out in the table below are the figures by region in England and Wales. See notes to editors for sources.

         
         

 

 

All private rented households

Housing benefit recipients in the private rented sector

%

         
         

 

England and Wales

3,900,178

1,574,371

40.4

         

 

North East

154,426

79,573

51.5

 

North West

462,899

221,809

47.9

 

Wales

184,254

86,785

47.1

 

West Midlands

321,670

139,661

43.4

 

Yorkshire and The Humber

353,448

150,830

42.7

 

South West

387,134

159,763

41.3

 

East Midlands

282,443

110,504

39.1

 

East

356,227

131,545

36.9

 

South East

578,592

212,127

36.7

 

London

819,085

281,774

34.4

 

Paul Kenny, GMB General Secretary, said “This growth in buy to let lending will give rise to even more claims by landlords for housing benefit to pay the rents.  Taxpayers already pay rent to private landlords owning more than 1.5 m dwelling and this latest growth will likely add another 16,000 new claimants.

Housing benefits to meet housing costs for rented accommodation on low incomes is a Thatcher Tory policy. The cost has ballooned to £23billion per year.

Over the past 30 years a huge slice of the £411billions of taxpayer’s funds spent on this Tory policy has been funnelled to private landlords as “corporate” welfare.

Labour’s traditional and more cost effective policy of building good quality houses to let at affordable rent for those on low incomes was ditched. Much of the stock of social housing that was sold off is now in the hands of “buy to rent” private landlords.

In Wandsworth for example there are 977 private landlords who own more than one of the 6,180 ex council leasehold homes sold under the “right to buy” which are now owned by “buy to let” landlords. One private landlord owns 93, another owns 32, another 15 landlords each own 10 or more and a further 83 landlords each own between 5 and 9 of these dwellings. Many of their tenants are in receipt of housing benefit rather than being charged affordable rents.

Public funds should be switched to investment in social housing and away from this failed expensive Tory policy of corporate welfare and private greed.

Half the cash spent in Britain on housing benefit last year would fund over 80,000 new homes each year across the country.

GMB wants a Labour Party election manifesto insisting that councils build new homes to let at affordable rents all across the country.

There are 177,000 new housing units in the capital with planning permission in place but where the development has stalled. The mayor Boris Johnson knows the problem but he is he doing nothing about it. GMB want an incoming Labour Government to use CPO powers to build social housing if these developments are not started within six months of the election.

Ending corporate welfare will save taxpayer’s money and will kick start the local economy. It will provide families with better quality houses with more security of tenure.”

End

Contact Gary Doolan 07852 182 358 or Lisa Johnson 07900 392 228 or GMB Press Office: 07921 289880 or 07974 251823.

For regional figures, please scroll to the bottom of this release and select your relevant release from the additional resources section:

Notes to editors

1  Housing Benefit Statistics - February 2013 Source: DWP;

2 Census of Population data - 2011 Source: Office for National Statistics - Crown Copyright Reserved

Report on BBC

Buy-to-let lending tops £5bn, says CML

Buy-to-let lending in the UK hit its highest level for nearly five years in the second quarter of the year, lenders say.

The Council of Mortgage Lenders (CML) said that 40,000 mortgages, worth £5.1bn, were advanced to buy-to-let investors in April, May and June.

This was the highest since the third quarter of 2008.

This trend could see new buyers fighting it out with investors as the housing market gathers pace.

'Renewed appetite'

The second quarter level of buy-to-let lending was 19% higher by volume and 21% higher by value than in the preceding three months.

Year-on-year, buy-to-let lending was 19% higher by volume and 31% higher by value, although it was picking up from relatively low levels. The peak during the housing boom for any one quarter was £12.7bn, which was reached in the autumns of 2006 and 2007.

This change echoes increased activity in the overall housing market to a degree.

The CML said landlords had been taking the opportunity to remortgage their properties during the spring, and were also benefitting from strong demand from tenants.

Groups serving and representing landlords welcomed the figures.

George Spencer, chief executive of online lettings company Rentify, said: "This growth is fuelled by a renewed appetite from investors - both experienced and novice alike, along with better availability of buy-to-let mortgages at lower rates and with looser criteria than at any time in the past five years."

Many think the pick-up in lending to landlords will continue after the Bank of England signalled a continuation of low interest rates.

"The Bank of England's forward guidance on interest rates has given investors more confidence, which should translate into further activity over the coming months and years," said David Whittaker, managing director of Mortgages for Business.

However, the state of the housing market varies in different areas of the UK, and is still being driven primarily by London and its attractiveness for overseas investors.

Stuart Law, chief executive of Assetz, a group of property companies, said: "While the growth of the sector in London is clear to see, the house price ripple effect is only just beginning now in the north of England."

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Additional Resources

Related release for the East

download pdf174Kb (pdf) - 22 August 2013

Figures for the East

Related release for the East Midlands

download pdf108Kb (pdf) - 22 August 2013

Figures for the East Midlands

Related release for London

download pdf106Kb (pdf) - 22 August 2013

Figures for London

Related release for the North East

download pdf93Kb (pdf) - 22 August 2013

Figures for the North East

Related release for the North West

download pdf108Kb (pdf) - 22 August 2013

Figures for the North West

Related release for the South East

download pdf122Kb (pdf) - 22 August 2013

Figures for the South East

Related release for the South West

download pdf104Kb (pdf) - 22 August 2013

Figures for the South West

Related release for Wales

download pdf98Kb (pdf) - 22 August 2013

Figures for Wales

Related release for Yorkshire & The Humberside

download pdf98Kb (pdf) - 22 August 2013

Figures for Yorkshire & The Humber