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Property experts says tax changes will lead to higher rents

One of the country‘s leading rental sector analysts is warning that tax changes for landlords’ mortgage interest relief, and the imminent second home stamp duty surcharge, may backfire in terms of rent levels and income raised for the government.

Chancellor George Osborne is introducing both measures under the guise of improving opportunities for first time buyers to purchase properties which otherwise may be bought by buy-to-let investors. Some also believe the measures aim to encourage institutional Build To Rent investors in a bid to improve the quality of the UK’s private rental sector. 

But Kate Faulkner, a leading commentator on the lettings market and the creator of Propertychecklists, says that while the policies may get a small number on the property ladder instead of renting and may help establish the ‘large landlord’ sector, there are considerable downsides. 

“Those who need to rent - students, overseas, people in debt, those waiting for social housing - are likely to see a hike in rents. And if buy-to-let reduces, the tax expected to be raised from the increases may not then be able to fund the first time buyer initiatives,” she says.

“So why on earth is George Osborne ignoring the money that investors could put into building instead of buying existing homes? Many landlords with £100,000-plus could help to create new homes. So where are the ‘mini Build To Rent’ sector initiatives for smaller landlords who are established and want to continue to expand their portfolio?” she asks.

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    Build to Rent for the small landlord would work well. We are diversifying our small buy to let portfolio into refurb or build to sell. We may sell some buy to let properties to finance this but sadly we will have to eject the tenants before doing so, in view of the Stamp Duty surcharge, as opposed to selling them as buy to let investments. With a little bit of incentive, instead of massive disincentive from the misguided Chancellor, Build to Rent would be an attractive option

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    We were buying the worst properties which obviously first timers couldn't buy, then refurbing to a very high standard. With all these changes coming through it is unlikely we will keep any more as btl, those which we do rent we need to increase the rent to maintain cash flow in the future. I find it discusting the way landlords are being victimised over tax. No other business gets taxed on turnover , what are they thinking? Its against our human rights and will be successfully challenge in court by Cherie Blair. We get no thanks for providing a great service which the government have failed to provide. This will bite them in the rear. PM

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