There are 1.5 million buy-to-let properties in Britain, which are typically interest-only mortgages, meaning that landlords don’t actually own much of the house. Landlords’ profit is largely from the rise in prices which they can only access by selling up, meaning they have to maximise their rental cash income, often to fund their next 25% BTL purchase.
Buy-to-let business is therefore high octane fuel for the housing bubble. The model is utterly dependent on house price inflation and it’s no coincidence that BTL profits and annual house price rises are both in double digits.
This drives up rents and kills the dream of home ownership for millions of tenants, but worse than that, our ComRes poll in March showed that a third of tenants are cutting back on food and two fifths are cutting back on heating – just so they can pay their rents.
If retailers hoarded food as a limited resource and profiteered from the consequent price rises, there would be riots on the streets. What the buy-to-let market is doing to tenants is having the same effect. People are going hungry so that other people can get rich quick.
