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BTL tax clampdown “won’t help Generation Rent”

The mortgage director of one of the world’s largest independent financial advisory organisations has said that George Osborne’s clampdown on buy-to-let investors will be “ineffective for its purported aims.” 
Mike Coady, who heads deVere Group’s deVere Mortgages brand, spoke out after the Chancellor announced a 3% additional stamp duty rate on buy-to-let properties and second homes in last week’s Autumn Statement.
“It is commendable that the government wants as many people to own their own home as possible – and, of course, this is something all of us in the mortgages industry would promote,” said Coady. 

“However, for three main reasons the Chancellor’s new 3% stamp duty surcharge will be ineffective in its purported aims of raising cash to help first-time buyers and paying for more affordable housing.
“First, the revenue raised by this initiative – £1bn by 2021 – is a nominal figure when given the scale and seriousness of the UK’s affordable housing crisis.   
“To many it seems this is something of a political stunt. The government is wanting to be seen to be acting on this emotive and topical issue and is doing so by appealing to the politics of envy with buy-to-let landlords and second homeowner the targets.”

Coady also warned of a ‘rush-to-buy’ phenomenon between now and April by those wanting to purchase a buy-to-let property racing to avoid paying the extra levy. This will, of course, push up prices in the short-term.
“Furthermore, in the medium to longer term, I don’t believe it will put off overseas or UK purchasers from investing in property,” he said. “Despite the 3% stamp duty surcharge, which is not ideal of course, most investors will still regard investing in property in the UK, especially in areas like London, the South East and Manchester, as an attractive and safe investment opportunity.”

Coady also pointed out that as property investment is typically a long-term one, 3% over the entire investment period is something most property investors will absorb.

He warned that those who are renting could find their rents are even higher after this policy comes into effect in April, as landlords pass on their higher costs to tenants. This, in turn, would make it even harder for first-time buyers to get on the property ladder.
“The stamp duty will be ineffective in helping first time buyers, indeed it could hinder them further.  If the government is serious about helping generation rent it needs to rethink. The solution to the housing crisis is not the rate of stamp duty,” concluded Coady, “Planning restrictions and building more homes would be a better way to deal with the ongoing housing crisis in Britain.”

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    So... the Institute of Fiscal Studies, the Institute of Economic Affairs, Policy Exchange, the RLA, the NLA, the SAL, landlords across the country, various heads of mortgage lenders, Say No To George, etc, etc, etc, are all telling the Chancellor that the tax grab will not help FTBs get on the market, and he still spouts the same old garbage.

    When will he come clean and admit that he really doesn't care one jot about FTB's? He can tax landlords but he can't tax owner occupiers so he just takes, takes and takes some more. This is all about filling the coffers and clearing the deficit. Anyone who thinks that George Osborne wants to help Generation Rent is seriously deluded.

    Even my own Conservative MP admitted that these measures are about nothing else other than tax revenue. Come on Osborne - 'Fess up' !!!

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    I think this will help the young get on the property market.. however at the expence of the rest of us.. my prediction is that come April the property market will collapse.. we will have to wait for first time buyers who are nervious of buying to get their act together and first timer landlords who would have bought a buy to let will now buy a single larger family property provided they can sell their existing home and not bother with buy to let at all. If I was in a position to do so.. I would personally sell EVERYTHING I have including my 800k private residence and sit back and watch the free fall.. picking up the pieces later.. I'm lucky I don't have any mortages but i see the pitfalls clear as day for those who do and it will indirectly affect me, my builder (who relies on buy to let renovations to keep him going through the winter periods) and when the average man realises what this really means.. their pockets, retirement package too.. Worse thing I've seen in 35 years and i would say worse than the 90's

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    I seems you are in disagreement with the country's top economists and lenders Steve.

    I accept we're going to have a price correction, that's inevitable, but it isn't down to the lunatic at No 11. It's because the ratio of house prices to incomes has got to the stage that the market is fragile. When interest rates go up (which may or may not be for a while yet) then that could well spark the correction or crash.

    However in a falling market, builders scale back and lenders don't lend much. So even with prices tumbling it's not going to help FTBs, unless of course they have wads of cash which for most is unlikely.


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