I wrote to my MP - Andrew Smith

Here's what I wrote:

Dear Sir,

I own a small business in Oxford City Centre.  Martin & Co Oxford trades as an independent Estate and Lettings Agent managing 320 properties in and around central Oxford, and a further 300 that where we find tenants for landlords.  All the properties that we support are owned by private landlords, the majority owning 1 to 3 properties, with some at the upper-end owning 10 or more properties.

 In Oxford, property is amongst the least affordable in the UK, making house ownership an unrealistic ambition for many residents.  New affordable homes for purchase are lagging demand, and demand for rental property outstrips supply.  Rental values are high as a result, and greater supply of good quality rental homes is badly needed, but will take 5 to 10 years to create.

 Recent legislation has increased the cost of purchase for any property that is not a principle residence via a 3% surcharge on SDLT.  This has reduced transaction volumes since last April by around 12% in Oxford.  However, due to demand outstripping supply house prices have continued to rise.  The reduction in transactions reflects fewer new investments by private landlords, further exacerbating the under-supply of rental property, resulting in rental values rising in parallel.

 The planned changes that limit private landlords from off-setting mortgage interest payments against income tax, will have a further profound impact on private landlords, and there are already indications that it is limiting new investment by current landlords, and in some instances resulting in them divesting property.  There is also clear expectation amongst landlords, that the changes will undermine their returns, and result in them increasing rents to claw back their losses.  The Royal Institute of Chartered Surveyors (RICS) has recently flagged this as a concern.

 I am writing to you, as I believe that current legislation has gone too far, and will result in unwanted consequences – reducing the availability of rental properties in a City where the gap between average income and average house price is comparable with parts of London.  This reduced supply, plus landlord’s looking to protect their investment returns risks the RICS prediction coming to fruition – an above trend increase in rental costs, causing more potential tenants to fail affordability tests at a time when social or more affordable alternatives are unavailable.  Since 2008, Oxford’s landlords have proven to have been very cautious in increasing rents, recognising the economic uncertainty faced by many tenants.  Since 2008 Oxford rents have not kept pace with inflation.  Current and planned legislation looks likely to result in that positive trend being broken, with rents rising well above long term trend, damaging the interest of tenants.

Most private landlords in Oxford take care to look after their tenants.  That has created stability based on good but not spectacular financial returns for landlords skewed towards capital appreciation rather than rental yields.  I am concerned that policy has gone too far and that working people in our City will suffer as a result.

Regards,

 Bill

And, here's the reply I received: