Property experts have warned that Chancellor George Osborne’s buy-to-let tax changes will take their toll on house prices in coming months – and potentially ‘cripple’ the London property market by next year.
The warning comes following predictions from The Royal Institution of Chartered Surveyors (RICS) that average house prices will plummet this summer for the first time since 2012, following the implementation of the Chancellor’s three per cent Stamp Duty Land Tax (SDLT) surcharge on second homes.
Under the recent changes, an investor buying a £1.5million second home would be hit with an SDLT bill of £138,750, up £45,000 from the £93,750 the purchase would have cost prior to the changes.
Property experts are warning that Britain’s capital, which is ‘propped up’ by buy-to-let properties, will see a ‘major shock’, assuming landlords and investors stray away from buying City properties.
Oliver Reiff, of Deutsche Bank, said: “This is likely to see fewer landlords buying properties, which will be a shock to the London market.
“You also have to bear in mind that because of new mortgage regulations in the pipeline, many landlords may not be able to take out as much debt as before.”
Henry Pryor, an independent property expert, added: “George Osborne’s buy-to-let tax changes will almost certainly push down house prices across the country – not just in swanky SW1 postcodes in London.”
Furthermore, RICS Chief Economist, Simon Rubinsohn, said: “The tax changes on buy-to-let is having a negative impact on mood in the market. It’s not beyond the realms of plausibility that we will see a slowdown.”