The chairman of Choices letting agency says the government is wrong to say its proposed tax changes will create a level playing field between buy to let investors and owner occupiers, because the cards are still stacked against landlords.
Simon Shinerock says recent support for the tax changes from financial advisers and Conservative politicians have a hidden agenda.
For example, he says financial advisors make a living selling collective investments, a sector that has lost out to buy to let. “A pension can borrow money and the interest it pays is a fully deductible expense for tax purposes - the same goes for other collective investments. So as an investor, if you put money into a fund that borrows money you don't need to in order to gain the additional buying power with its risks and rewards.”
Shinerock also accused the government of “a similar deceitful theme of sleight of hand” because it is effectively attacking landlords - a generally Conservative-supporting group, he says - in order to appear more ‘middle ground’ and take votes from an increasingly left-leaning Labour party.
“The real crisis is of course a building crisis, we have not built enough homes for our growing population and no amount of fiddling with the balance of power between owners of landlords will make any difference” he warns.
Shinerock also criticises Build To Let, the generic term for institutional investment in purpose-built and managed units for private tenants.
“So far the returns from the [buy to let] sector have been too low to tempt in massive institutional investment, so the plan is to hobble the private landlord, risk the political backlash and at the same time encourage and incentivise institutions to mass build small apartments for the masses” says Shinerock.
“The outcome will be the worst of all worlds. It won't encourage home ownership, it discourages those who want to better themselves and it will leave a generation with nowhere to live apart from unattractive apartments designed by bean counters.”
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These sort of articles (and there are plenty) make no sense to me as on the same day other property headlines read ‘latest CML figures show big buy to let lending increase’. Buy to let is causing havoc for owner occupiers and taxing the problem is government’s best and most profitable solution.
The letting industry just doesn’t seem to get it. The party has been too good for too long and its now a little pay back time. Lending is up so tax changes (proposed) are not biting which is a sign to Government that they can keep taxing in new ways.
The reason that buy to let is still expanding is because most people have simply not assessed the impact of the proposed changes on future profitability. The Government were sneaky enough to make the changes sound a long way off. I know this to be the case, because I talk to clients on a day to day basis who have portfolios of property and for the most part have no clue as to how the changes will affect them. Wait until it sinks in and see what happens.
Is BTL really causing havoc for owner occs? I'm one and I'm looking to move home and am not having any problems so far.
I agree that some form of control needs to be applied, but the way it's going is dangerous. People need to accept that not everyone wants to buy and nor should they be forced to. A very significant number of people in the UK are not credit worthy (from a lending perspective) and never will be and therefore will want and need to rent. Should they be railroaded into buying? It all sounds a bit totalitarian to me.
Exponential rent and price rises are for the most part caused by out of control demand, fuelled by uncontrolled numbers of people arriving in the UK every minute of every day.
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