Lets lynch the landlord

It seems the gravy train of Buy to Let may be finally running towards the buffers. A huge number of borrowers are due to come off two-year fixed rate deals in the next couple of months. Rising interest rates, and some macro issues in the bonds market will mean they'll be looking at significant cost increases on their next deals. Rents are also softening, as the supply side increases - through new landlords, and also owners switching to renting until HIPS sorts themselves out. Even before May's rate rise, returns on property have slipped below ISA's.

It would be pleasing to see many of these amateur Rackmans catching a cold; but of course, they've still got the huge amount of equity built up in the properties over the past few years. As with any bubble, the casualties will be amongst the late entrants - as property prices soften, those who bought flats off plan may find that the valuation given to them by the developer's surveyor may not quite match the market rate.

The rise of Buy to Let may well be one of the most socially divisive policies of the past 10 years. A systematic transfer of wealth from the Have Nots to the Haves. A process that has occurred not by 'letting the market decide', but by proactive legislation. In 1999 tax relief on Buy to Let properties stood at £119m, last year is was at least £2bn. In contrast, first-time buyers have had absolutely zero tax relief since MIRA was abolished in 2000. This, and the loopholes in Capital Gains Tax, means Buy to Let landlords have been able to easily outbid first-time buyers at every turn: last year in London, 60% of all new-build apartments were bought by Buy to Let speculators.

It's been a long time since we've had a property owning class living off unearned income, at the expense of the other half of society. If Buy to Let does continue, we're very much moving back to those days; with the exclusion of a generation of people who would ordinarily have expected to own their own homes. And interestingly, a generation of educated and articulate people who seem to be quite accepting of this state of affairs.