A pinch of Channel 4 salt
There was a 5 minute piece on buy-to-let investors by Faisal Islam on the Channel 4 News last night.
We’re great fans of all things Jon Snow and the Channel 4 News, but the report last night lacked balance and was – albeit in a polished, suit-and-tie Channel 4 sort of way – more sensationalist than it needed to be.
The reporter’s premise was:
– Buy to let investment is growing
– Young people can’t afford to get on the housing ladder
– Therefore it’s the greedy buy to let investors who are preventing younger people from buying a house
Our view is just that a balanced report would have included some important points:
– Buy to let mortgages only account for 11% of mortgages issued, so who are the other 89% of buyers “taking property away from first time buyers?”
– Buy to let is not risk-free. The report didn’t mention this. If you’ve been reading the property pages over the summer you’ll have seen various pieces on investors who over-extended and soon realised that a) their capital values had sunk, b) their income was lower than expected. Together a) and b) spell trouble. Indeed the reporter could have taken a look at the hundreds of units of new build in Manchester and Liverpool whose values have been destroyed since 2007.
– Buy to let investors did not create the housing bubble on their own, however easy a target they may be for reporters. A balanced view would also encompass discussion of the government, Bank of England, FSA, Council of Mortgage Lenders, lenders who supported increasing prices with securitised debt to consumers, estate agents and sellers who conducted bidding wars, etc, etc
We are not myopic apologists for buy-to-let finance products and we know that one-sided reports often provoke more response, and all news outlets are desperately trying to “engage” their audience.
However, be sceptical: the news cycle works in tabloid-style generalisations which miss the detail of the sales and letting market in your area.
After the report Jon Snow spoke to Grant Shapps MP, the Minister for Housing. Now Mr Shapps is a Very Influential Person in our industry and it was interesting to hear him speak live for the first time. He made the point above re. risk, but also – perhaps tellingly – he could not respond to Jon Snow’s questions re. “what are your policies to increase ownership among the young?”
As Oxford letting agents, our question to Mr Shapps would have turned this on its head: what policies might you introduce to encourage longer-term renting?