George Osborne’s controversial buy to let tax is finding itself under increased scrutiny from would-be investors since the Chancellor’s changes took effect at the beginning of last month.
Investors are complaining that the Chancellor’s second home stamp duty surcharge is taxing them out of the market – with a recent study from online letting agents PropertyLetByUs.com claiming that just one in five landlords believe there are still profits to be gained from investing in additional properties.
The 3 per cent surcharge is the first in an unfortunate series of tax hikes the Government has targeted at landlords, who from this tax year forward, will also no longer automatically receive a 10 per cent tax break for ‘wear and tear’.
Under the new reforms, landlords have no choice but to deduct the costs they incur.
The Council of Mortgage Lenders believes that the number of property sales in the UK will plummet at a rate of around 10,000 per month, now that the so-called ‘buy to let rush’ has subsided and the second home tax has been imposed.
With buy to let investors effectively taxed out of the market, experts predict a surge of first time buyers will be taking advantage of Osborne’s changes in coming months.
Big-name lenders such as Halifax, Virgin Money and Barclays have already switched their focus to the first time buyer market, launching a dizzying mix of revamped Help to Buy mortgage offers, with reduced rates and fees.