Almost a fifth of landlords in London plan to sell up amid Chancellor George Osborne's tax hikes on the buy-to-let sector, according to a poll. Osborne scrapped a tax relief allowing landlords to offset mortgage interest costs against their income tax bills. He reformed a general tax-free allowance for maintenance costs so landlords must now claim against the cost of specific repairs carried out. And from April 2016, the chancellor will add an extra 3% levy on top of normal stamp duty rates for all purchases of additional property.
The National Landlords Association (NLA), a membership organisation, said 19% of landlords surveyed in London in January 2016 plan to sell property, up sharply from 4% when asked the same question in July 2015. There was an increase across all regions of the UK from landlords saying they intended to offload property. In July 2015, the UK average was 7% of declared sellers. By January 2016, this had grown to 19%. In July, 934 landlords were polled while in January, 1,364 were asked. While some landlords report plans to sell up, several data reports show an increase in activity in the buy-to-let sector ahead of April 2016 as investors rush to beat the stamp duty rise.
"Local property markets vary greatly across the United Kingdom, but we are seeing a loss of confidence across the board as many landlords realise they won't be able to remain in the market," said Richard Lambert, chief executive of the NLA. "If landlords follow through with their intentions over the coming months this could lead to a massive sale of property, as we have previously warned. However, this may not be a straightforward process, especially for those with stock in low demand areas. We urge those considering selling up to think about when they will need to do so, and to plan ahead now in order to minimise the risk of losing money as a result of a failure to sell."
Osborne is targeting landlords to help fund his desire to increase home ownership in the UK. High house prices in some areas of the country, particularly London and the south east of England where there is a housing shortage, are shutting first-time buyers out. The government has launched a number of schemes to help new buyers onto the housing ladder, including Help to Buy and shared ownership.