A very recent article has proposed the idea that landlords should be banned from purchasing new-build homes. Today, landlords in the United States are creating an extreme wealth gap between landlords and tenants. As soon as a new property is put on the market landlords are quick to purchase the property and rent it out for a price they decide on. The average rent is 1,493 a month! “Most private landlords are not “getting rich off the taxpayer”, but instead are receiving transfers of income and wealth from tenants, who are significantly poorer than they are. In this way, it would appear that the PRS [private rental sector] increases wealth inequality in society.” This process is only beneficial to the landlords because it increases their wealth and keeps the poor, poor. It is unfair for first time buyers because they are forced to rent due to the lack of new homes at reasonable prices out on the markets. With rent prices being so high it is extremely difficult to fund a big enough deposit to purchase a home in the future.
One solution that could address this problem is to add restrictions on new homes. A restriction that does not allow landlords to purchase a newly built home if they wish to rent it out. Another suggestion was to restrict “the amount of buy-to-let lending banks could do, for example to 5% of their book, to restrict the availability of credit to private landlords, and a review of the taxes levied on second properties.”
Banks also play a role in this wealth gap because people who have already been approved in terms of credit will most likely be approved for a second home with more benefits. While on the other hand “tenants” are struggling to save for a down payment and be approved for their first home.
Landlords would argue that there should not be a limit to how many newly built homes they could purchase because they feel as if everyone has an equal opportunity to purchase a home. However, they are blinded by the wealth and are robbing others of opportunities.
I chose this picture because for sale signs are like flags to landlords. As soon as a sign goes up they are ready to make an offer on the property so that they can later invest and only become richer. Before you know it all of the properties are sold to landlords ready to make money.