Tax changes and lending restrictions will have little impact on buy-to-let
Wednesday 13 April 2016
The juggernaut of the buy-to-let sector will not be slowed by George Osborne's new rules for landlords, a financial expert has claimed.
With the introduction of the stamp duty tax, and the forthcoming plans to scrap the higher rates of income tax relief, the intention of encouraging first-time buyers the chance to get on the housing ladder has come under close scrutiny with many wading in with criticism.
But Chris Giles of the Financial Times fears the changes would do little to stem the buy-to-let boom, and this includes the recent Bank of England's introduction of tougher rules and regulations for buy-to-let lending.
He claims it won't be enough to dampen the market, or encourage more owner occupation - which is at the heart of Osborne's misguided dream.
Stamp duty hike will have little effect on housing market
In crude terms, Mr Giles says that with a stamp duty hike of 3 per cent houses prices could drop by around 3 per cent, putting house prices back to where they were in summer 2015.
He added: "So unless you have only been priced out of owner-occupation by the past nine months’ house price increases, stamp duty changes will not help you much."
He also said the Bank of England's new regulations would not affect 75 per cent of loans, adding the crackdown was 'nothing of the sort'.
He added: "The buy-to-let boom has occurred because British house prices have become detached from incomes."
"Underwriting standards for owner-occupied mortgages correctly insist on strict house price to income limits."
"But potential landlords are not caught by these restrictions because the underwriting standards relevant to them test rental income against future interest burdens and such is the demand for homes that buy-to-let still generally passes."
"The fundamentals of Britain’s housing market is therefore still skewed towards buy-to-let. I am not saying this is necessarily bad."
"But whatever the authorities might pretend, it is here to stay."
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