Buy-to-let need not keep us all awake at night
Mark Davies is managing director of Link Mortgage Services
The Budget, for landlords at least, was appropriately close to Halloween this year but Philip Hammond refrained from any more frights for buy-to-let borrowers.
Certainly given the volume of renters, there remains a strong momentum for sorting out tenancies in general to offer more protection to the many millions now renting their accommodation.
There have been calls in the past for tax incentives for landlords offering longer-term tenancies but this Budget was not for that. It’s certainly something that would be welcome to all parties given the current tapering of tax relief for buy-to-let investors.
It’s a tried and tested path for policy makers to use fiscal incentives to drive behaviour and one better piece of news might be the Chancellor’s proposal to make it cheaper for landlords to sell homes to tenants through a capital gains tax break. This could provide landlords with a windfall and tenants with a significant contribution towards their deposit.
Tenants would have to have been living in their property for at least three years to qualify but many question the scale of such an initiative given it relies on eligible households both wanting to buy the house they currently live in, and being able to afford the remainder of the deposit and mortgage.
The Residential Landlords Association called for the Chancellor to scrap the stamp duty surcharge of 3% on additional properties, which was originally introduced to discourage landlords from buying more properties that could go to first-time buyers.
However, the stamp duty changes have been clogging up the property market – particularly at the top end – as buyers don’t want to buy homes that come with a massive tax bill.
The odds of that happening were always remote in my opinion as it is arguably easier to help first-time buyers through the extension of Help to Buy and scrapping stamp duty for those buying properties worth up to £500,000 on a shared equity basis than be seen forfeiting the contributions of landlords.
Buy-to-let remains a vital part of our housing economy and in an effort to take the steam out of the growth of the previous years, government has learned again that the law of unintended consequences is the one certainty that any tinkering can guarantee to deliver.
With only fiscal tools to fix the housing market it is little surprise behaviours can become very unpredictable.
Landlords might dare to hope for a happy ending to all this but my bet is that Halloween will not stop the nightmares.