Communities and Local Government CommitteeWritten evidence submitted by Owen Raybould

The point I wish to make is a fairly short one but I feel that some awareness absolutely has to be raised about this issue:

Improvement of tenants rights always has the result of reducing the amount of speculative investment in property and I am talking here about the kind of unstable + unsustainable mortgage-driven buy to let investment that characterised the housing price bubble that developed since 1996, and still exists.

In mainland Europe where tenants have longer occupation rights (as opposed to our six months with two month Notice to Quit) you will not find the same levels of buy to let mortgage activity, because the BTL mortgage is actually built around the flexibility to be able to evict on a two month notice. If you think about it, it has to be. Section 21 of the housing act 1988 created this framework to have six month tenancies and to be able to evict by serving a two month notice. However, Buy to Let mortgages didn’t appear until 1996 when there was an amendment to the law making the two month notice mandatory and so that it could be applied in every tenancy if the landlord desires. This was the crucial key to unlock the flood of speculative investment into property. Anyone who studies property investment will know this. Amazingly, it happened with virtually no fanfare or attention from the public. You could say that only hindsight gives us a clear understanding of the importance of S21, but having looked at previous land reforms such as enclosure, what is happening to housing is basically along the same lines, there are so many parallels between the two it is shocking.

I am not therefore saying that there is going to be anytime soon the political will to lengthen the mandatory notice to quit, or tenancy length, but if there could be some exemptions built into the legislation, even this would have the effect of reducing the amount of speculative investment and give first time buyers a fighting chance.

For this I would refer you to the campaign which was recently run by a CAB worker called Debbie Crew entitled “The Tenant’s Dilemma” and gives a way of being able to protect tenants from sudden eviction when they have done nothing wrong. The PDF is attached.

What makes me outraged is the reaction to this campaign that I found on a landlord’s website here:

I would draw your attention to this quote: “There is no point in having a strong scheme to protect tenants, if because of it few people are prepared to be landlords any more. This will benefit no-one, tenants least of all, as there will be fewer properties available for them to rent.”

IF THERE ARE FEWER LANDLORDS THERE ARE MORE PROPERTIES AVAILABLE FOR FIRST TIME BUYERS. Ecological concerns alone are going to prevent the housing stock to ever be raised to the point where there are enough properties for both BTL investors and first time buyers. We all know this is never going to happen. This is why the legislation underpinning BTL is crucial.

April 2013

Prepared 16th July 2013