There’s some brilliant news for first-time buyers

Finally, some good news for first-time buyers: accidental and hobby landlords are getting rid of their properties at record speeds. In UK cities, the housing market is now flooded with flats and small homes that landlords, many of whom have been only dabbling unseriously in the business for years, now want to shed as quickly as possible. According to the financial newspaper CityAM, the number of landlords looking to exit the market is at a 13-year high.

Why now? Twin pressures are pushing them to sell. First, the crisis in the mortgage market means many property owners are being shovelled onto a variable rate agreement, which means landlords may no longer make a return on a month-by-month basis. And second, perhaps more significantly, they fear a huge financial hit if they hold on and then decide to sell at a later date.

The chancellor, Jeremy Hunt, announced last week a reduction in capital gains allowance, which reduces the amount of money an individual can make from the sale of assets before paying tax on their winnings. This will fall from £12,000 to £6,000 in April, and then again to just £3,000 in April 2024. Great news for the public purse; bad news for property speculators.

Flooding the market reduces demand and puts a cap on prices. In fact, Halifax reported this week that house prices are falling at their fastest rate for 14 years, after reaching a temporary, artificial high in the spring of this year. That price peak was caused by a lack of properties being put up for sale, leaving potential buyers fighting it out with each other and provoking bidding wars. Cash buyers were king. How could a first-timer compete with that?

No longer. Now, if you’re lucky enough to have saved a deposit, here’s your chance. House prices are dropping. They will likely continue to drop for some time. For many people, the next two years could be the moment at which the housing market finally becomes accessible.

But not for everyone. In fact, for long-term private renters with no opportunity to save a deposit (or – let’s be frank about how the market works – inherit one, or be handed it as a gift) the loss of part-time, hobbyists landlords from the market is a disaster.

Private rents are already increasing quickly in response to the hike in mortgage interest rates. Extreme demand for a limited number of rented rooms and properties is also putting pressure on prices. There are waiting lists at every letting agency, not just in cities but across the country. The most in-demand areas, such as parts of London, are now asking renters to compete with each other on price, entering a bidding war just to access the right to rent. Some are even demanding a year’s rent up front as a downpayment. If you can’t afford a deposit, you can’t afford that.

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So the good news doesn’t last long. As usual, our housing market pits one group against another and fails to meet actual housing needs. Structurally, it’s still broken. A better return from private landlords for the Treasury is great, but it’s not enough. No consideration has been given to the unintended consequences of one policy area on another. For the housing system as a whole, is it really a good time to encourage landlords to leave the market in droves, all at once?

Underpinning every problem is a lack of supply: lack of new housing, lack of good quality and affordable rented housing, lack of retirement homes, lack of family homes, lack of social housing. Meanwhile, the government rolls back its promises to commit to new development, allowing local nimbys to run roughshod over their national housing targets.

If housing is a cabinet-level responsibility, why are the most influential decisions that affect the housing market always taken in the Treasury or No 10 – and with no heed to housing costs at all? Perhaps it’s not a cabinet priority after all. No change there, then.