Osborne’s attack on buy-to-let landlords fuels soaring rents

GEORGE Osborne’s clampdown on buy to let investors will send the cost of rent soaring for tenants, according to a report released yesterday.

With many families and young workers struggling to get on the housing ladder due to rising prices, the shortage of available homes to rent has pushed up rental prices at a time of booming demand.

Tenants in London face a 25 per cent increase in rents over the next five years while the average rise across the rest of the country is expected to be 19 per cent.

That would push the average rent in the capital up from £1,452 a month now to £1,815 in 2021 – adding £363 a month to the bill.

The average rent nationwide would rise by £123.50 to £773.50 a month, estate agents Savills revealed.

The company suggested rents are being pushed up by an attack on landlords from the former chancellor, who was sacked by Theresa May after the EU referendum. Mr Osborne introduced a three percentage point increase in stamp duty for landlords and second home owners in April this year.

The changes pushed the tax bill on a £200,000 home up from £1,500 to £7,500 – a five-fold increase.

They also added an extra £45,000 in tax to buy a £1.5million home, pushing up the stamp duty bill from £93,750 to £138,750.

The stamp duty surcharge triggered a stampede of sales in March this year as buy to let landlords rushed to complete their purchases before the new taxes came in.

Landlords will be hit again next year as high earners are stripped of a tax break that lets them deduct the cost of their mortgage interest from what they owe HM Revenue and Customs each year. The changes will be phased in between 2017 and 2021.

David Cox, managing director of the Association of Residential Letting Agents, has described the tax raid as ‘an outright assault’ on buy to let landlords.

Lucian Cook, director of residential research at Savills, said the changes have put off many buy to let investors, leading to a shortage of rental properties on the market.

It is also feared that landlords are pushing on the higher cost of doing business to their tenants in the form of higher rents.

Figures last month from the Bank of England showed demand for buy to let mortgages had ‘decreased significantly’ in recent months. The slump in demand for buy to let lending in the third quarter of the year was the biggest recorded by the Bank since it started reporting the data in 2007.