In April this year, a raft of anti-landlord measures came into force – courtesy of George Osborne. There was the increased Stamp Duty hike of 3% on buy-to-let properties and the beginning of the phasing out of interest on buy-to-let mortgages as allowable business expenses for landlords. The latter, I believe, is currently being challenged in the courts.
Now George is gone and Brexit’s here
I for one was pleased that Mr Osborne was given his P45 by Theresa May in the tumultuous weeks that followed our decision to leave the EU. I think he had it coming but maybe that’s just me being spiteful!
Personally, I am pretty sure that although Osborne’s tax changes were sold as help for first time buyers, they were really aimed at giving The City a piece of the buy-to-let pie. This is because some of the legislation specifically excluded large scale investors and of course large financial institutions are not as dependent on borrowed money as are small-time landlords.
Uncertainty is now adversely affecting the property market
The RICS and other institutions are now reporting a significant slowing of the property market following the decision to begin leaving the EU. How long this uncertainty will last is anyone’s guess but it’s a given fact that uncertainty almost always affects markets badly. And since the negotiations are going to be long and complex this uncertainty probably won’t be short-lived. Add to this the fact that, assuming we do get a significant reduction in immigration, demand for housing will slacken. I personally would welcome this, even though it might hurt my pocket, because the UK really is becoming uncomfortably overcrowded and the quality of life really is being affected.
It’s time to reverse Osborne’s tax changes
The phasing out of mortgage expenses as an allowable business expense was an outrage and, whilst I agree with the extra 3% on second or additional homes, it is wholly unjustified to penalise people who buy property to let in this way, and for many it is their main livelihood.
The fact is that Brexit has naturally caused great uncertainty and that uncertainty has caused a slowing in the property market, so I think it would not only be right to reverse Osborne’s outrageous tax changes but it would also be financially prudent.
Malcolm James Stretten
What do YOU think?