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Buy-to-let investors to sell up in droves

Thousands of landlords will be forced to sell up over the next couple of years amid Chancellor George Osborne’s tax hikes on the buy-to-let sector, new market analysis reveals. 

The research by estate agents Maskells suggests that the changes to stamp duty, tax relief and new tougher mortgage application rules could make it harder to make a profit from letting property, which in turn will force many landlords to ‘dramatically’ increase rents to recoup their costs.

Aside from the extra 3% stamp duty surcharge which was introduced in April, the amount landlords can claim in mortgage interest relief will be limited from 2017, which will eat into landlords’ rental returns, especially higher and additional rate taxpayers.

Additionally, the 10% Wear and Tear tax relief for landlords who rent out furnished homes was scrapped on 1 April, leaving landlords free to only now claim for the amount that they have spent, making buy-to-let a far less attractive proposition.  

Maskells believe that Osborne’s tax measures will result in an additional 163,000 homes on the market from landlord sales by 2017/18, which will result in an oversupply of homes for sale in parts of the country placing downward pressure on house prices.

Charles Curran, principal at Maskells, commented: "The buy-to-let market has provided so much of the rental stock the country depends on, but the government’s tinkering could lead to a sell-off.

"This situation does seem akin to a slow motion train crash: buy-to-let landlords with mortgages are standing on the track in a game of chicken with regulatory locomotive, hoping to time their exit as best as possible. This high-risk game will almost undoubtedly leave casualties."

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    As a professional landlord of some 25 years letting in London Ealing and Cork City Ireland. They tried the same tactic in Ireland by disallowing 25% of the interest allowable and introducing a property tax simultaneously. This along with some emergency taxes as a result of the recession left top rate landlord taxpayers with a marginal rate of 62% tax. What has happened ? A mass sell off by landlords. We now have a full blown housing crisis in Ireland with a new department and cabinet secretary for housing. No new houses being built and record rent rises throughout the country.as a result of poor supply. The cabinet is now considering tax incentives to attract new landlords ! Full circle methinks. certainly some of the predictions in the article will come true.

  • Peter Lassman

    But the powers that be think they know best, history will repeat it self and there will be rent increases to cover expenses and supply will run short in the coming years

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