2015 Budget buy to let restrictions to clamp down on overbearing rent market

Thu, 09 Jul 2015

2015 Budget buy to let restrictions to clamp down on overbearing rent market
The buy to let market, which is thriving currently, is set to take a hit after Chancellor George Osborne's 2015 Budget announced it will clamp down on the market in an attempt to make the house market more equal.

Commenting on the changes, Osborne said: "We'll create a more level playing field between those buying homes to let and homes to live in." The amount of tax relief which can be claimed by landlords on mortgage interest payments will be cut, to the basic rate of tax which is 20 per cent (at the time of writing).

At the moment, property investors are able to claim tax relief on monthly interest repayments for the top level of tax that they pay, so as high as 45 per cent can be claimed by the wealthiest.

This change is not expected to begin until April 2017, and it will be introduced gradually over four years.

Osborne's changes have divided opinion, with some experts saying that the tax relief changes will have a significant impact on a number of private investors, and affect the supply of properties available for rent.

Danny Cox, of Stockbroker Hargreaves Lansdown, said: "Buy to let just got a lot less attractive for anyone borrowing to fund their purchase. The question is whether this is just the thin end of the wedge."

However, some experts believe it could benefit first time buyers and homeowners looking to move, as banks may be prompted to shift their lending to them. Lucian Cook, of Savills UK, said: "This may encourage banks to put greater emphasis on first time buyer and home-mover lending. These measures are likely to heighten the emphasis on Help to Buy to boost access to home ownership and, importantly, increasing levels of UK housebuilding."
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