Buy-to-let stamp duty rise will push up rents, say MPs
Friday 19 February 2016
MPs have finally waded in to criticise George Osborne's madcap move to target landlords in the buy-to-let sector, with some predicting it could even damage Britain's economic recovery.
As predicted, the plans to penalise landlords by hiking up stamp duty has now attracted the attention of fellow Commons members, which should hit a nerve with the Chancellor.
Only recently, Simple Insurance highlighted the growing contempt for the plans which are set to come into force in April, warning Osborne that other MPs were certain to have their two-pence worth, if only because many themselves own second homes.
Stamp duty hike could spark mass buy-to-let property sell-off
Officially, Osborne's move to target landlords is an attempt to improve the number of those buying rather than renting, but his move could backfire spectacularly according to the Commons Treasury select committee (TSC).
They say the surcharge could lead to job losses and stifle growth.
Like many others, the TSC also says it would also mean angry landlords selling their homes, leading to fewer properties available and result in a hike of rents prices for tenants.
It said that confidence would plummet, which was necessary for an efficient market.
The report by the TSC reads: "Were the measures taken to curb buy-to-let to have a substantial effect, they would come at a cost to the wider economy.
"Any impediment to labour mobility will reduce employment, economic activity and the economy’s long-run productive potential."
Meanwhile, the chairman of the TSC, Andrew Tyrie, said more should be done to support landlords in the second-home sector, and said a number of tax rises from last year has done nothing to support the Government's lower-tax society pledge.
He said: "The measures taken to curb buy-to-let will come at a cost, not only for those who will now face higher rents, but for the wider economy.
"A failure to ensure that individuals have access to a well-functioning, affordable rental market will inhibit labour mobility and reduce economic activity."
The attack on Osborne is the latest in a long-list of stinging criticism.
Not a week seems to pass without another group throwing its predictions into the mix, and not one has so far been supportive of the move.
The most eye-catching condemnation has come from the National Landlords Association (NLA), which says landlords will offload their second homes in droves when the new levy comes into force.
Targeting buy-to-let will push rents up
They claim 1,000,000 landlords could sell up in the next five years, with 500,000 to go in the next year alone.
The Council for Mortgage Lenders says it could have a two-pronged effect, first by reducing the flow of rented properties without giving young people the chance to buy their first home.
Secondly, those who have no option but to rent could face higher soaring costs set by landlords determined to keep their second homes by covering their losses.
Then of course, comes Cherie Blair - wife of former PM Tony - whose law firm is supporting a legal challenge by two plucky landlords against Osborne's plans.
They say proposals to remove landlords' mortgage interest tax relief, a second controversial proposal which could come into force in 2017, is a breach of human rights.
It makes you wonder who will be next to launch an attack on the plans, and whether anyone at all will come out and support the Government. Highly unlikely at this rate.
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