Industry urges Osborne to avoid fresh attack on buy-to-let

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Industry heavyweights have urged Chancellor George Osborne to avoid a fresh attack on the buy-to-let sector when he gives his Budget next week.

In his emergency Budget last July, Osborne announced cuts to tax relief on buy-to-let homes in an attempt to even the odds between would-be landlords and owner-occupiers.

From 2017, relief for buy-to-let landlords will be gradually cut to 20 per cent from the current 40 or 45 per cent.

Then in his Autumn Statement the Chancellor added a 3 per cent surcharge onto stamp duty for buy-to-let properties, starting from April 2016.

Prime Minister David Cameron has reportedly told Osborne not to rock the boat in the Budget to avoid any backlash that may cause voters to go against the Government’s pro-European stance in the upcoming Brexit vote.

Fleet Mortgages chief executive Bob Young says: “On the buy-to-let front I don’t hold out much hope for the Chancellor to rescind what he’s done.

“I guess the recent move away from using pensions as his personal cash machine means that he has to raise money somewhere. Therefore you can suppose that there is no love lost towards the buy-to-let sector, and something he does today will not impact the economy for another three or four years, so it is a problem he’s kicked down the road.”

But Young says the Chancellor might not need to make more buy-to-let changes.

He says: “I think he’s had the impact he’s wanted. The general sense is that buy-to-let is a bit of an issue for some people moving into the market. So he has freed up property into the owner occupier sector, and that’s really what he’s after.”

Association of Mortgage Intermediaries chief executive Rob Sinclair says he expects the Budget to reflect the Government’s existing stance on buy-to-let laid out in the Financial Policy Committee’s December consultation.

The consultation closed last week and the Government will give a response this month.

He says: “I expect the Budget, unfortunately, to confirm the consultation.”

Sinclair says that he hopes Osborne will change the stamp duty surcharge exemption that will currently be enjoyed by landlords owning more than 15 properties.

He says: “We are hopeful that they might move the number of properties down from the 15 number to something that’s more proportionate, either ten or five. But I have my doubts.”

Legal & General Mortgage Club director Jeremy Duncombe said last week: “With less than a week to go until Chancellor George Osbourne’s budget, we remain hopeful that the Government will refrain from further intervention in the buy-to-let sector.

“The full impact of the announcements made in the Summer Budget and Autumn Statement are not yet clear, so it is too early to say whether they have had the desired effect on the housing market. Further involvement at this stage could therefore derail the important market changes that the Chancellor was seeking.”

Duncombe says he wants to see the Government bring in tax relief incentives to encourage older borrowers to downsize.

He says: “This will help free up a significant amount of housing stock and benefit potential buyers looking to either move up the housing ladder or purchase their first home.

“At the same time, it is imperative that housebuilding remains at the top of the Government’s agenda. A housebuilding revolution is needed if we are to resolve the imbalance of supply and demand in the UK property market.”