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TODAY'S OTHER NEWS

Buy-to-let tax will trigger buying spree

Chancellor George Osborne's assault on the buy-to-let market yesterday could trigger a short-term “spree” as landlords rush to buy property before the surcharge on stamp duty is introduced next April.

Critics of the measure also say that tenants are likely to bear the weight of the latest tax blow, with reduced supply of properties to let and higher rents as landlords try to make their sums add up.

David Cox, managing director, Association of Residential Letting Agent, said the move was "catastrophic" for the private rental sector, following recent changes to mortgage interest tax relief and the annual wear and tear allowance.

“Increasing tax for landlords will increase rents and reduce property standards for tenants.”

Cox said that to make owning a buy-to-let property financially viable, landlords will need to pass on the increased stamp-duty costs to tenants, who will see higher rents and less property maintenance.

“The changes will also deter new landlords from entering the market, pushing the gap between dwindling supply of available property and growing demand even further apart, which will also – in turn – push up rental costs."

Laith Khalaf, senior analyst at Hargreaves Lansdown, said landlords now face the “double whammy” of higher rates of stamp duty and lower income tax relief.

“In the short term this could lead to a buying spree as would-be landlords act ahead of the rise in stamp duty.

“The longer-term effect will be to make buy to let less attractive as an investment proposition.”

Jeremy Leaf, former RICS chairman and north London estate agent, said the move could also hit new developments given that many are underpinned by buy-to-let investors.

“There is a danger that it will kill the market and result in some developments not happening at all. 

'Landlords will either sell or not add to their portfolios at a time when we need more affordable accommodation. Such a move inevitably puts extra upward pressure on rents."

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