Page 51 - The Economist20171214

The Economist December 16th 2017 Britain 51
2 thismakesbuy-to-letinvestmentlesslucra- large numbers. showed that the rate at which landlords’
tive.DatafromtheBankofEnglandsuggest One consequence could be a more sta- loans turn sour could be four times greater
that yields in September were below 5%, ble financial system. Roughly 15% of mort- than the rate for owner-occupiers. All
their joint-lowest rate since records began gage debt is on buy-to-let properties. The things considered, a smaller buy-to-let sec-
in 2001, when they were above 7.5%. Bank of England has warned of risks asso- tormay come as a reliefto regulators.
At a recent seminar of the Robbie Fow- ciated with this. Property investors buy It might also cheer up would-be home-
ler Property Academy in a nondescript ho- when prices are rising but sell when they owners.Buy-to-letterssometimescompete
tel in London, the mood remained upbeat. are falling, makinghouse pricesmore vola- with first-time buyers for property—and
Mr Fowler claims in a promotional video tile. Buy-to-let landlords are also more like- they often win, since they tend to have big-
that, “It doesn’t matter what state the mar- ly to default than owner-occupiers. One ger incomes. Lately the buy-to-let boom
ket’s in—there’s always money to be reason is that doing so does not force them has been correlated with galloping house
made.” Yet few are so optimistic. In the out of their home. Another is that buy-to- prices, which have made it harder for
third quarter of 2017, new buy-to-let lend- let mortgages are more likely to be interest- youngsters to get a foot on the housing lad-
ing for house purchases was around 15% only (ie, where the principal is not repaid), der. One study suggested that more than
belowtheaverageofthepastfiveyears.Re- which means that monthly repayments ten percentage points of the 150% rise in
search from Savills suggests that, for the can go up sharply if interest rates rise. The real house prices between 1996 and 2007
first time, landlords may be selling up in Bank of England’s stress tests last month was caused by increased lending to land-
lords. As the buy-to-let market has turned,
house-price growth has weakened. In July
The economics of crime
to September the number of mortgages
Lucrative loot granted to first-time buyers hit its highest
level since 2007.
The future for buy-to-letters will not get
much brighter. In January a tweak to the
Thieves are striking less often, buttheirhauls are getting bigger
rules on taxing capital gains will increase
ATE at night, two hooded men lurk in a third. This may be linked to the higher the liabilities of landlords who register as
Ldriveway in Solihull. One hovers near price ofgold, which, though below its businesses. Institutional investors are
a parked Mercedes-Benz, as the other 2011peak, is still over40% more valuable moving on to buy-to-letters’ turf, hoping to
stands by the front door, wavingaround than in 2008. CDsand DVDs, which these benefit from theireconomies ofscale to of-
what looks like an iPad. He is trying to days even charity shops struggle to shift, fer better housing to tenants. It was good
pickup a signal that the car’s fob emits are now stolen in only 3% ofburglaries. while it lasted, but the golden age of the
from inside the house. That is then Similarly, in 2013 smartphones were amateurlandlord may be over. 7
pinged to the othercrook, who uses it to stolen in 51% ofrobberies, up from 28% in
unlockthe driver’s doorand start the 2009. But as manufacturers caught on
engine. The CCTV footage ofthis “relay and introduced security measures such Tory Brexiteers
crime”, released by West Midlands Police as “kill switches”, the resale price of
in November, lasts about a minute. That stolen phones plummeted, and pick- The dogs that
is all the time the thieves needed. pockets were forced to pinch otheritems.
Crime has been decliningin most rich Not all advances in technology hinder didn’t bark
countries since the1990s. Many explana- the crooks. Some use Google Street View
tions have been put forward, from ageing to scope out posh properties, and track
societies to betterpolicing. But it seems theirresidents on social media. Relay Despite big concessions to Brussels,
that overthe past decade orso, as theft in crimes have been a boon forcarthieves. ToryBrexiteers stayquiet. Why?
Britain has become less common, it has But these heists may soon be scuppered
also become more lucrative (see chart). by low-tech security measures. Disklok, T HAS been an up and down week for
One possibility is that the average which makes old-fashioned steering- ITheresa May. On December 11th the
thiefhas become more skilled, says wheel locks, says its sales have doubled prime minister basked as pro- and anti-
Siddhartha Bandyopadhyay, an econo- in the past year. Crooks may want to pack BrexitToriesalike cheered the deal that she
mist at the University ofBirmingham. As an angle grinderalongwith the iPad. had secured on the first phase of Britain’s
crimes become harderto pull off, the Article 50 divorce from the European Un-
least competent robbers drop out of the ion. But two days later, as she prepared to
market. Those who lackthe expertise to Richer pickings head back to Brussels to get an EU summit
steal a modern car, say, may branch out England and Wales, thefts, 2006=100 to approve the deal, Mrs May suffered her
into otherruses, like credit-card fraud. Burglary Vehicle Personal first big parliamentary defeat, when 11 of
And crooks respond to the changing Number of incidents her own MPs joined the opposition to
value ofgoods, says Mirko Draca of the 150 amend the EU withdrawal bill.
University ofWarwick. With colleagues 100 Mrs May deserved praise for pushing
at the University ofGlasgow and the 50 the Article 50 process forward. Yet it is sur-
London School ofEconomics, he exam- prisingthat Brexiteers were so loud in their
0
ined the effect ofprice changes on items 2006 08 10 12 14 16 approval of the deal. Mrs May has blurred
stolen in London in 2002-12. They found many oftheir red lines. She accepted a big-
Average value of items stolen
that, on average, a 10% increase in the Real terms 200 ger exit bill than they originally envisaged.
price ofa good is associated with a 3.5% 150 The agreement on the future rights of EU
rise in the likelihood ofit beingstolen. 100 citizensin Britain givesthe European Court
Such price sensitivity is reflected in of Justice (ECJ) a say for eight years after
what gets filched. In 2008 jewellery or 50 Brexit. The agreement to avoid a hard bor-
watches were pinched in about a quarter 2006 08 10 12 14 16 der in Ireland implies full alignment with
Source: ONS
ofburglaries. Now that figure is around a most single market rules. And Brussels in-
sists that transition entails accepting all EU 1