A new campaign says it’s not just the buy to let sector that will be penalised by changes to landlord tax breaks proposed by the government - estate agents, too, are predicted to suffer from fewer sales to property investors.
A new website - www.saynotogeorge.co.uk - has been set up a nucleus for opposition to Chancellor George Osborne’s proposals, which will limit tax relief for landlords to the basic rate of income tax, currently 20 per cent, even if the individual property owner pays a higher rate of tax.
The new website explains how the tax proposal may hit different people in different ways - from letting agents to landlords to tenants - and this is its section for estate agents:
Estate Agents will initially be affected by the serious downturn in the Buy-To-Let Market.
Currently 15% of mortgage approvals are for BTL’s and this market is set to disappear.
That will lead to the House Builders scaling back production thus there will be far fewer new-builds to market. In a time when Agents are struggling for stock this will not be good news for them.
When Landlords start off-loading properties it’s possible that prices will drop, particularly in areas where there is a high percentage of rental houses. We could enter another period of downwardly-spiraling house prices resulting in some offices or complete chains of agents disappearing.
To understand the scale of the problem it's important to look at the numbers. The Bank of England said that only 1 in 5 Landlords will be affected but we think this is rubbish.
However if we take this to be the ratio of Landlords that are really seriously affected, and we agree with the Governments figure of 2 million Landlords in the country, then we're talking about 400,000 people. If they were to sell off only 2 properties each then that's 800,000 properties hitting the market. It might solve the issue of shortage of stock but what will it do to prices?
Alas the problem could be even worse than that. If we say that the Pareto (80/20) rule applies here and 20% of the Landlords own 80% of the rented properties, how many houses will actually come to market? It's a frightening thought.
The building industry have only really just got back on their feet from the recession. How long will it take for them to recover from this?
The campaign website also links to a petition which Letting Agent Today has reported on in recent weeks.
There are now well over 11,000 signatories to the petition - you can see it here - and if it goes on to receive 100,000 signatures by late January the government will be obliged to consider giving the issue additional parliamentary time.
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I raised this issue in Industry views prior to the election and since the budget I have written to the Chancellor asking some pointed questions and asking for a hearing. We actually launched our own petition at the time aimed at saying no to Shelters left wing proposLs.
In the meantime everyone connected with the Lettings business should give their support to this petition. It's incredibly ironic and a betrayal of their core principals that the Conservatives should be introducing these restrictive anti market measures.
As I have suggested before, the ultimate goal may be to encourage large scale institutional investment into the sector and to do that they may be deliberately softening up the private landlord competition.
Everyone should say no to George, on everything. The man is the worst type of self-serving careerist, the likes of which infest much of Westminster today. Wants power for power's sake, egotistical, dead behind the eyes - I trust him about as far as I could throw him. The man pretends to be competent, but he's very far from that.
However, lo and behold, I agree with him on this. It's quite clearly a populist policy, but why should buy-to-let landlords continue to get such large tax breaks?
The site is a joke and completely contradicts itself, for example:
"If you’re a First Time Buyer …
You may see the proposed change as an opportunity, because you think it will cause house prices to drop. That may happen, but most likely not.
If you’re a Home Owner …
However as the full impact of the change hits home it could lead to Landlords selling lots of properties and therefore having a negative impact on house prices.
If prices fall enough it could lead to a lot of homeowners being trapped in that dreaded situation of negative equity and no way out."
So it will cause house prices to fall if you are a owner or not fall if you are a first time buyer. This is rabid verbal diarrhea of desperate landlords who have an unfair advantage over first time buyers. Less landlords means more owners and thus more properties changing hands and more sales commission for estate agents.
Brit I think you need to read what the site says AND what you've written because the specific word that you're misunderstanding is 'COULD'. The site doesn't say 'WILL' so it is saying that if something happens the outcome will be. You're missing the point by a mile.
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