Having already introduced a tax burden on individual landlords in the last budget, which will start affecting the rental market from April 2016, the chancellor decided that this was not enough to put private investors off the idea of tackling the legacy of chronic housing shortage. In addition to 150% tax on profits, it could now cost 5 times more to purchase an average size property as an investment.
Mr Osborne is quoted as saying "Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy." We agree but go one step further. Nobody, but nobody should be squeezing out families who can’t afford a home to buy and this should include the government.
So to summarise professional landlords who are providing essential accommodation to tenants in need, are pushed out. We ask, who will house the families after their homes have been sold? How much will rent increase by to pay the new tax bill?
I also expect to see an increased sense of urgency from investors to complete before April 2016 adding to the upward pressure on house prices just before the spring market which is seasonably the busiest period for house purchases. Furthermore, rents could increase by as much as a third with a typical monthly rent for a rental property in London increasing from £1500 to £2000. This will of course not happen overnight, but will take most tenant by surprise nevertheless.
Quoting David Cox (Managing Director of Association of Residential Letting Agents), “this is catastrophic news for the private rental sector”.
I hope the government make urgent provisions to deal with the unintended consequences before it is too late.
Greg Tsuman MARLA
ARLA Regional Representative