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BUDGET 2015: Reaction to the BTL clampdown

Association of Short Term Lenders chief executive Benson Hersch and chief executive of bridging lender Hope Capital Jonathan Sealey both suggested that investors may turn to other avenues.

Hersch said: “The restriction of tax relief on BTL interest for individuals may accelerate the move to using companies, especially since corporation tax is reducing.

“Overall, the effect on the property market will probably be neutral and on the general economy will be positive.”

Sealey said: “We could potentially see landlords selling off some of their portfolio if tax rates become too onerous or finding other ways to invest in property.

“Other than buy-to-let, the cut in corporation tax will help all of those companies who use bridging as a means to develop properties, or as a means to expand their businesses.

“As will the 50% increase in national insurance employment allowance – as many developers are small businesses.”

Legal Marketing Services chief executive Andy Knee said the restriction of buy-to-let tax relief was a blow for landlords, while John Goodall, chief executive of peer-to-peer mortgage lender Landbay, suggested that many see the pillaring of landlords as fun.

Both Steve Bolton, founder and chairman of Platinum Property Partners and Jonathan Samuels, chief executive of Dragonfly Property Fiannce, said hitting buy-to-let landlords may harm tenants.

Bolton added: “This change in tax law could therefore deter investment in the private rented sector and restrict supply at a time when demand is for quality rented accommodation is high.

“From a tenant’s point of view, such a move may force some landlords to increase their rents to ensure that they remain in the black and not in the red.”

Jonathan Samuels, chief executive of Dragonfly Property Finance, added: “There are concerns that landlords will simply bump up rents to cover the hit. This may well happen in some cases but market forces and the rents people are prepared to pay are likely to offer a degree of resistance.

“Whether or not this has created a level playing field for landlords and prospective homeowners is open to debate, but the playing field is certainly now more level.

“The buy-to-let market is part of the fabric of UK society, but at the same time so is home-ownership. It is a tough balancing act and only time will tell if the Chancellor has got it right.”

The ASTL’s Hersch added: “Clearly the government is either optimistic about the future or worried about how politically digestible austerity programmes are.

“The restriction of tax relief on BTL interest for individuals may accelerate the move to using companies, especially since corporation tax is reducing.

“Overall, the effect on the property market will probably be neutral and on the general economy will be positive.”


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