Landlord Mortgages owner Lee Grandin has predicted a “major price correction” caused by central government stimulus combined with the buy-to-let tax changes.
The Treasury has enforced quantitative easing since 2008, while the buy-to-let market will have to cope with a reduction in mortgage tax relief from 45% to 20% from 2017 to 2020.
Grandin said: “No one can truly call when a bubble will burst but if commentators are stating the property market is overvalued then the sudden supply of property post buy-to-let tax changes could well be the catalyst for a major price correction.
“I recall being interviewed by the BBC on buy-to-let new build buying pitfalls.
“I told them that buying new build was nothing more than a bet on house price movements. It was a high risk investment strategy.”
He added: “They [lenders] should have known their lending model was risky. It was never going to politically acceptable or sustainable to have Tom, Dick and Harry own a BTL portfolio.
“Take note: A price correction where the losers are Tom, Dick and Harry with a BTL portfolio and the Banks who supported them is a vote winner.
“We all want our children to own their own home don’t we?”
Lee Grandin is speaking at the Property Investor Show in Excel London today.