PayProp: Buy-to-let market could see Johnson boost

Robyn Ashman

July 23, 2019

The accession of Boris Johnson to Number 10 and his view on tax changes could prove a boon for the buy-to-let market, Neil Cobbold, chief operating officer of PayProp, has claimed. 

Johnson finally secured the job he has been chasing for so long after defeating foreign secretary Jeremy Hunt in a ballot of Conservative members.

And Cobbold has said he could provide a much needed boost to a beleaguered buy-to-let sector.

He said: “The buy-to-let market has stalled due to tax changes like the stamp duty surcharge and cuts to mortgage tax relief under Section 24. If Boris Johnson is able to remove all stamp duty and land tax surcharges for buy-to-let landlords, he could reinvigorate the sector – especially in areas with high-value homes where we’re not seeing a lot of movement at the moment.

“Although this could help the market, a pledge to cut stamp duty alone won’t be enough to counteract losses from Section 24 and bring the leveraged buyer back into the market. However, the emotional impact of some good news from a new government would have a positive impact on the sector.

“By now, the cost of Brexit has been priced into the market. We’ve already gone through enough periods of thinking we were going to leave, so the industry will be indifferent to the October deadline, adopting the attitude that either something will happen or it won’t – it’s out of their control. The only parts of the country that could be affected are London and other immigration hotspots, especially if the government wins its Right to Rent appeal in the High Court.

Johnson has received stick from some quarters due to his blustering style. However Cobbold believes it will be more about the team he puts in place rather than the PM himself.

He said: “Boris can be a divisive figure, so I don’t think he will have an overwhelming influence, one way or the other. More important will be any positive changes in the economy, who he appoints as the Secretary of State for Housing, Communities and Local Government, and how actively the person engages with the industry.

“Something that would help the industry would be if he overturned Section 24, but it’s doubtful that will happen. As we now have such a large private rented sector, it’s too much money for the Treasury to give up.

“If there was one the new Prime Minister could do to change the industry for the better it would be to regulate it properly. The current patchwork of piecemeal legislation burdens professional agents without any real enforcement to deter the small rogue element.

“A new government could, in consultation with the industry, replace it with well thought-out rules and regulations together with a central enforcement body. It would at a stroke help improve the consumer’s view of the industry, weed out the few lettings businesses that give the sector a bad reputation, help cut fraud, and bring about a higher level of professionalism. The changes we’d expect to see would be similar to what happened with financial services years ago.”

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