Re: Private market undermines social change
The changes have gone through. You pay extra stamp duty on sales of second properties - and can't claim tax relief on interest payments. The second I agree with, but is sort of unfair, in that property companies can take interest costs from profit. Just not the people who buy one or two flats as an investment. However it's to disincentivise people from becoming amateur landlords, as it distorts the whole property market - as well as being an extra risk to the economy during recessions.
You've always paid capital gains tax on the proift you make selling a house you don't live in.
But you won't solve the rise in house prices by moaning about it, and you don't solve any problem by price fixing. Prices have risen because we restrict the building of more houses in the places that people want to live. If you restrict the supply of something people want, then they'll pay more in order to get it.
One solution the last Labour government tried was to encourage more people to live in flats, to increase the density of living in popular areas. That had some effect, but most people don't want to live in flats. It could just be a cultural thing. When I lived in Brussels it was quite normal to live in apartments in the city. Even families. But in Brussels you could get a whole range of apartments, including ones with 3 decent sized bedrooms, a large sitting room and separate dining room. Too many flats in this country are too small to be comfortable, so most people that live in them would prefer to have a small house - putting further upward pressure on prices.
In the brave new world of perpetual growth of property values, the rent doesn't need to help pay off the capital, it just needs to cover the real costs (maintenance etc) plus a contribution to any applicable mortgage interest (why should the renter pay all the interest when the owner gets by far the biggest part of the benefit).
Economics is more complex than that. If property prices didn't change, but inflation was 2% a year, then the money you spent on buying your rental would become less valuable every year. Hence we will always have rising property prices. This is much more a problem in popular areas, where we need to find ways to either build more housing, or persuade people to live in other areas.
You also assume that all rentals will rise in value. Which is what caused the last property crash. They have (with crashes) for the last few decades, but that's not certain and not a sensible way to invest. So rent has to cover the cost of capital. If I bung £200k on the stock market (in a pension say) then I'd hope to get maybe inflation + 5% a year, over my lifetime. So £200k buying a flat needs to promise a similar income, or you're better off buying into a tracker fund. So yes, the renter needs to cover all the interest and all the other costs, and a bit on top to cover the cost of capital, or renting won't be profitable, and people will put up the rents. Or do less maintenance. If you don't have interest to pay then you'll make more profit as a landlord.
Finally to give you some numbers for when I was flat hunting in 2012. A nice 2 bed flat in my area was £160k. On which you could charge about £800pm rent. A repament mortgage on that, with 20% deposit was a similar amount to the rent. Interest only (with 20% deposit) would be about £320. Add in insurance of £100 + ground rent of £150 that's £570 before maintenance. Add in one month per year of lost rent due to tenancy changes and £50 a month maintenance means you're making £700 costs, so you're making £100 a month profit.
So £32k investment (20% deposit) would earn you £1,600 at 5% interest, on that investment in property you're only making about £1,200 a year - with the hope of capital gains.
Buy outright, and you're saving £320 interest, however 5% on £160k investment is £8,000 - and you're now only earning £5,000 on your investment.
Which is why amateurs should stay out of being landlords, because you're basically just keeping your capital warm and hoping for huge capital gains.