From Austin Lafferty, Director
In the Summer Budget 2015, Chancellor George Osborne pledged to clamp down on the rapid growth in buy-to-let mortgages with new rules designed to create ‘a level playing field’ between buy-to-let mortgages and residential home ownership.
GSPC member firms act for a huge variety of house buyers and sellers, with buy-to-let landlords among them. The buy-to-let clients themselves range from large property companies with a portfolio to householders letting out a single property while they are working away in another part of the UK.
With 15% of the mortgage purchase market being buy-to-let, we must take the interests of these clients seriously.
While we understand the motivation behind evening out the tax relief regime so that investors do not have an unfair advantage over homebuyers, it is also important to encourage the kind of investment in property, contents, services and personnel that buy-to-let represents as it helps to stimulate the economy and also provides affordable short to medium term accommodation for those not in a position to buy.
The two new measures aiming to create a fairer market are cuts in the amount of tax relief that buy-to-let landlords can claim on mortgage interest payments, and in due course, removing the 10% allowance for wear and tear. While these may bring a reasonable balance to the housing market for now, we would not wish to see landlords being penalised for their choices by further burdens.
Initially, we may see a readjustment of rents where owners seek to spread the load of the tax burden on to tenants, but eventually the market will dictate the level of rent.