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Mortgage chief says buy to let tax problems are exaggerated

A well-known mortgage broker is quoted as saying that buy to let organisations are complaining too much over tax changes for the sector and may not be able to justify their assertions over the effects of the measures.

Mortgage broker Lee Grandin is quoted in the financial industry publication Mortgage Advisor that some of the most dire predictions are unjustified. 

In recent months, landlord organisations and some letting agencies have criticised the Cameron and May governments for tax changes, notably the phasing down of mortgage interest tax relief from April 2017, the three per cent stamp duty surcharge on the purchase price of buy to let properties, and reforms of the Wear and Tear Allowance.

“Landlords may increase rents but I think this will be short-lived” Grandin is quoted as saying.

“The NLA said ‘If landlords follow through with their intentions over the coming months this could lead to a massive sale of property’ It’s a simple matter of supply and demand: If you get a sudden a supply of property from smaller landlord’s off-loading properties that will lower the selling prices” he is cited by Mortgage Advisor as saying.

“Any purchasing landlord will take into account the new tax rules and work out what the property is worth based on current rents that are achievable; they will be transacted on the basis of the lower net yields as a result of the tax changes.

“The purchasing landlords will be better placed to hold the lower net yield long-term thus squeezing existing smaller landlords further, The only respite will be if first-time buyers take up the slack but with four years of landlord squeezing ahead I doubt they will rush in.”

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    Being old I remember the time when all borrowers had MIRAS. This was a tax relief on mortgage interest which was deducted at source. In other words borrowers paid less than the true monthly payments as the revenue was part funding it. This was phased out with much anger in the market but over time this has been forgotten.

    I suspect that the changes by our elected dictatorship of taxing landlords will be, in time, forgotten and built in as a cost. Such cost being passed on to the tenants.

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