A former Tory grandee has criticised the government’s recent buy-to-let tax tax squeeze, describing it as “ill conceived”.
Former Tory vice-chairman and shadow Vice Secretary to the Treasury Lord Flight (pictured, right) has called for the government to scrap many of the recent taxes on landlords and “provide the support needed to the individuals and small businesses who make up the vast majority of the country’s landlords”.
Stifling investment
His comments were made on the Conservative Home website over the weekend, in which he also calls for the recent hike in Stamp Duty on buy-to-let purchases and reduction in reliefs to be scrapped because they are “stifling investment, as anyone could have predicted” and catching out “natural Conservative voters”.
“The decisions to impose a stamp duty levy on the purchase of homes to rent out, coupled with restricting mortgage interest relief to the basic rate of income tax and the decision to tax a landlord’s turnover rather than profits, are causing many landlords simply not to invest further in much needed new homes to rent; or even to consider leaving the sector altogether,” he says.
“The mortgage interest restrictions need to be scrapped, and the stamp duty levy needs also to be cancelled where a landlord invests in a new property, brings an empty home back into use, or converts disused office or retail space into homes. It is perverse that this tax actively discourages investments in the much-needed new homes that add to the net supply of housing.”
Fewer rental properties
At the same time Stuart Law, CEO of leading property investment firm Assetz, this weekend revealed that he believes the recent tax increases via changes to Stamp Duty and reliefs have already reduced the size of the buy-to-let market by 50% this year, and that this will “lead to many fewer rental properties coming to the market, pushing up rents”.
“The new changes will bring to market a lot of cheaper housing for first time buyers for sure but we’ll see capital growth slow or even go negative as supply begins to exceed demand for a few years caused by landlords selling their properties,” he says.