James Cartlidge
Main Page: James Cartlidge (Conservative - South Suffolk)
James Cartlidge (South Suffolk) (Con)
I congratulate the hon. Member for Norwich South (Clive Lewis) on his maiden speech. As a Suffolk MP, it is good to see that there are some good things coming out of Norfolk.
I want to draw the House’s attention to my interests. I am a controlling shareholder in a mortgage broker and property portal that is focused on the shared ownership sector. It includes First Steps, which will be of interest to London MPs.
According to the Intermediary Mortgage Lenders Association, if current trends in tenure continue, two decades from now, for the first time since the early 1970s, the majority of Britons will rent their home. I have spent my commercial life focused on first-time buyers, and I do not want to live in a country where home ownership is restricted to the few. That is why I strongly support the measures proposed by my right hon. Friend the Secretary of State to support home ownership, particularly the extension of the right to buy. It is important to remember that this is not just about getting on the property ladder; it is about people keeping a roof over their head. Housing repossessions are at the lowest level for nine years; indeed, repossessions and arrears are falling. I welcome that. We must never forget that a key element of any housing policy is a strong economy in which people can afford to pay their mortgages, gain employment to obtain mortgages, keep paying their rent, and so on. I am proud to be a Conservative in a Government who are delivering a strong economy where people can get on the ladder and get on in life.
I set up my company in 2004. I was originally a mortgage broker, although we have since diversified, and I want particularly to focus on mortgages. I have to say to the shadow housing spokesman, the hon. Member for Wolverhampton North East (Emma Reynolds), that when we started in 2004 I was absolutely shocked and appalled by some of the practices in the mortgage lending industry. I was stunned that people who already had an adverse credit history and huge unsecured debts would call us up seeking a mortgage. Indeed, they were often able to obtain one, on a self-certified basis, through so-called adverse, heavy-adverse and super-adverse products. One very famous American bank even had a “credit builder” product, which basically meant “unlimited-adverse”. People could have missed as many payments as they wanted and still obtain a mortgage.
Those were bad days for the mortgage industry. They were overseen by the Financial Services Authority, which was set up by Gordon Brown in 1997. When he did so, he said that it would give stability to the financial sector. For me, the biggest failure of the Labour Government was their failure to regulate the mortgage sector. I was a business owner in the mortgage sector, and we constantly received correspondence from the Financial Services Authority—huge reams of regulation and gobbledegook. Every six months we had to submit a capital adequacy return. Northern Rock would have been doing the same thing, so why could not the FSA have spotted what was happening? It was an incredible failure to regulate banking. Let us not forget that 1998 to 2007 was the most unprecedented period of growth in house prices in this country, so when Labour Members table a motion about first-time buyers and affordability, they must recognise their own culpability in this matter.
One specific issue that I feel very strongly about is the growth of buy-to-let. I would never criticise anybody who has invested in property, especially given that we have had such problems in our pensions sector, not least because of the tax brought in—again—by Gordon Brown. I do not blame anyone for doing that, and I do not think we should do anything to clamp down on existing buy-to-let, because that would force rents up. However, when we look at new entrants to the market in the years ahead, we have to start to take account of the fact that the assets in buy-to-let will shortly hit £1 trillion. The key point about buy-to-let is that it is not a level playing field. Those properties are properties that first-time buyers wish to buy as well.
Three key aspects illustrate why buy-to-let is not a level playing field. The first is stamp duty. If I buy my first property, I pay the same rate of stamp duty as someone buying their 15th buy-to-let portfolio property. I do not think that is acceptable. Then there is tax relief, which has been raised by hon. Members in all parts of the House. If we were to give first-time buyers the ability to offset their mortgage repayments against tax, we would be told that that was stimulating house prices, yet we feel quite happy that a buy-to-let landlord should be able to do the same. Again, I have a real problem with that.
The most important point is about mortgages. If someone telephones our biggest mortgage bank, which was bailed out at great cost by the public, they will find that a residential customer—a first-time buyer or home mover—has to have a capital repayment mortgage, which is absolutely right, but that a buy-to-let landlord can get a mortgage for the same property from the same bank on an interest-only basis. The Intermediary Mortgage Lenders Association has stated:
“The ‘triple lock’ of the new regulatory landscape—the mortgage market review (MMR), Basel 3 capital adequacy rules and macro-prudential regime, disadvantages first-time buyers relative to buy-to-let borrowers and may help to entrench the decline of owner-occupation going forward.”
That is what the mortgage lending industry says. It went on:
“For example under the MMR at an interest rate of 4%, first time buyers required to take out a capital repayment mortgage will face monthly mortgage payments 58% higher than a landlord”,
who is probably borrowing to lend the property out to frustrated first-time buyers.
Julian Knight (Solihull) (Con)
I am very interested in my hon. Friend’s analysis of the buy-to-let mortgage market. I would point out, however, that the oversight of that market has been far better under this Government with their regulation of financial services than during the Labour party’s time in government.
James Cartlidge
It has to be said that the oversight of mortgages could not have been worse: it was a very grave failure under the FSA.
The thing about the level playing field is that I want to see a country where first-time buyers on average earnings have a realistic prospect of buying a home, which is not that ambitious. I am a one nation Conservative, and I do not want to be in a two nation country with those who own property and those who have absolutely no chance of doing so. That is the key point. There are those who will feel that owning their own home is a long way away, but they want to feel that they have a chance. That is one reason why I support measures such as the extension of the right to buy and the Help to Buy individual savings account deposits. We want to give people opportunity.
As we move forward, Mr Speaker—[Interruption.] Sorry, Madam Deputy Speaker. It is the force of very short habit, as I have only just got into the House.
I want us to consider such points, because we need a level playing field. House prices are affected not just by building and the supply of building; demand factors are critical as well. House prices collapsed in 2008 not because we suddenly built more homes, but because of the economy and what happened to mortgage finance. I hope that my right hon. and hon. Friends will take cognisance of these points.