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."