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Peers Rebel Against Buy-to-Let Plans

Tuesday, 19th January, 2016

Lord Flight - Chairman of Flight & Partners Recovery Fund - and a former Shadow Chief Secretary to to the Treasury, joined a chorus of disapproval as he spoke out against the Government's plans to raise taxes and limit allowances for buy-to-let investors.

He wrote, "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.

"Buy-to-let does not enjoy any of the major tax advantages of pension saving: i.e. tax credits on the amount invested and accumulation of income and capital gains free of tax within a pension scheme. The only buy-to-let "tax advantage" has been the ability has been the ability for the interest cost to be offset against an individual's income to determine their tax bills - the very thing which the Finance Act measure has hit by limiting the tax deductibility of mortgage interest to a 20% tax rate. This will hit more modest buy-to-let investors the most, while many of the more sophisticated have their buy-to-let properties held via a company.

"If the Government's thinking is that buy-to-let investment has squeezed young buyers out of the market, this is misconceived. The fundamental problems creating scarcity value have been our nightmare planning arrangements and the hoarding of land with planning permission by developers. Furthermore, the new high rates of Stamp Duty are a major "disable" when first time buyers cannot borrow to finance large Stamp Duty costs. Politically, the Government may lose more voters over this issue than they realise: there are many  thousand buy-to-let investors living in marginal constituencies."


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