You are here: Home - Mortgages - Buy To Let - News -

Tory peer warns buy-to-let tax changes could lead to ‘crash’

Written by: Moa Aarenstrup
Lord Howard Flight has criticised the government’s buy-to-let tax changes, warning that they could lead to a ‘sharp fall in prices, if not a crash'.

In an article written on the Conservative Home website, the former shadow chief secretary to the Treasury said that limiting the amount of tax relief available for landlords to 20% will prompt some to sell their properties.

He also argued that the 3% Stamp Duty Land Tax surcharge which will apply to buy-to-lets and second homes from 1 April will put prospective buyers off, leaving an imbalance between supply and demand that could trigger a crash.

Lord Flight wrote: “I suggest, apart from anything else, that now is precisely the wrong time to be attacking the buy-to-let market when the balance of supply and demand is shifting.

“More sellers and less buyers clearly has the ability to create a sharp fall in prices, if not a crash.”

According to research published by Your Move and Reeds Rains, the cut to landlord tax relief due to be phased in from next year has already begun to have an impact on the market, as this was a ‘major factor’ for 50% of landlords looking to sell their properties in November.

Lord Flight argued that it would have been more fair for the 20% tax relief limit to apply to new, and not existing investments. He went on to warn that many tenants’ security will be at risk as landlords may want to evict them in order to be able to sell their property.

“If the government’s thinking is that buy-to-let investment has squeezed younger buyers out of the market, this is misconceived,” he wrote.

“The fundamental problems creating scarcity value have been our nightmare planning arrangements and the hoarding of land with planning permission by developers.

“Furthermore, the new high rates of Stamp Duty are a major ‘disable’ when first-time buyers cannot borrow to finance large Stamp Duty costs,” he added.

Lord Flight said buy-to-lets have provided some three million homes for those not able to afford to purchase a property, particularly in London.

Property website Zoopla has warned that rents may increase as a result of the Stamp Duty surcharge, however BNP Paribas said it expected little national impact, with central London, Manchester and Leeds being affected most.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week