Danger of Serious House Price Fall Due to Buy-to-Let Tax Changes
A lender specialising in the private rented sector, issued a stark warning that house prices could plummet because of the government’s impending buy to let tax changes.
The cumulative effect of the increase in stamp duty, tax relief and stricter mortgage application criteria will result in a downward trend of investment in the PRS, and this could cause a significant decrease in house prices.
The mortgage interest relief that landlords can claim from next year will be reduced to an eventual 20%, coupled with the 3% stamp duty hike will see many landlords’ profits being drastically cut.
The head of the lender, Lee Grandin, recognises that it will be hard to predict when the so called bubble will burst, however he is adamant that the buy to let tax changes, along with the stamp duty increase will be major factors in a “major price correction”.
Speaking to the press Grandin said: “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.”
Grandin continued by saying: “It was never going to be politically acceptable or sustainable to have Tom, Dick and Harry own a buy-to-let portfolio.
“Take note: A price correction where the losers are Tom, Dick and Harry with a buy-to-let portfolio and the banks who supported them is a vote winner.”