Peer criticises attack on buy to let

Property News
A Conservative peer and former shadow chief secretary to the Treasury has condemned the government’s “sudden attack” on the buy-to-let market and warned that it risks causing the very crisis it is aiming to prevent.
Lord Flight said on the Conservative Home website that the government was wrong to introduce new measures to curb buy-to-let and that its actions could put the security of thousands of tenants at risk as landlords look to evict before they sell.
He said: “I hope the government will re-think its sudden attack on buy-to-let this summer and autumn. Otherwise, it risks the very crisis in the buy-to-let housing and lending markets of which the Governor of the Bank of England has recently warned.”
Bank of England Governor Mark Carney has expressed fears that the high levels of lending in the buy-to-let market was a potential threat to the UK’s economic recovery as borrowers could be exposed following a downturn, which could hit the wider housing market and economy.
In December, he said the central bank was prepared to take action over concerns that large numbers of landlords could sell if prices were to crash again.
Lord Flight argued that buy-to-let was an “entirely sensible” market economy development providing an alternative to saving for retirement through pension schemes.
He said: “Given the poor performance of the stock market over the last 20 years, it is hardly surprising that many people have opted for buy-to-let investment as an alternative, and more successful, retirement provisioning investment. Buy-to-let has, moreover, provided some three million homes for those not able yet to afford to buy their homes – especially in London.”
As part of the Autumn Statement last year, Chancellor George Osborne announced an increase in stamp duty of 3% for landlords and second home owners as part of the government’s efforts to dampen the buy-to-let market. The amount of tax relief landlords can claim on properties will also fall from April 2017.
Critics have argued that these changes could lead to an increase in rents as landlords look to recoup their money by pushing up prices.
“The risk is self-evidently, that as some buy-to-let investors are motivated to sell as a result of the reduction in the tax offset of mortgage interest, potential buyers will be put off by the additional 3% stamp duty on top of what are already confiscatory rates of stamp duty applying in London where properties are generally more valuable,” said Lord Flight.
“More sellers and fewer buyers clearly has the ability to create a sharp fall in prices, if not a crash. A significant increase in those selling buy-to-let properties may also put thousands of tenants’ security at risk as buyers will want to sell with vacant possession,” he added