Chancellor George Osborne’s stamp duty surcharge could backfire by slashing tax revenues as investors desert the market, experts have warned.
Steve Bolton, founder of Platinum Property Partners, accused the Chancellor of trying to “destroy” the buy-to-let market in the hope that this will solve the housing crisis.
“However, it has been the severe lack of home-building over the last decade that has got us into this situation in the first place.
“Trying to address this problem by attacking private landlords seems short-sighted and another tax grab strategy.”
Bolton questioned estimates that the 3% surcharge on landlords and second homeowners will raise an additional £1 billion for the Treasury.
“If this is based on the current size or growth projections of the buy-to-let market this calculation is seriously flawed.
“The market is likely to substantially contract given both this and the changes to mortgage tax relief announced in the Budget, so the amount raised will reduce accordingly.”
Bolton said “Mum and Dad” landlords looking to provide a nest egg or housing stock for their children will be hardest hit.
“This effectively punishes those who have worked hard to provide for their families, and parents hoping to use buy-to-let to help their children get a foot on the property ladder could well be prevented from doing so.”
Bolton said amateur landlords may also be forced to sell.
“Limited supply of rental property and additional costs for landlords, including the reduction in mortgage tax relief, could increase rents in the short-term and make it even harder for tenants to save for a deposit in the future.
“As always, the devil is in the detail, but property still remains an attractive investment.”