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Landlords will take brunt of tax cut hit – Star Letter 23/10/2015
Each week, we round-up the best comments, emails and letters to the site and pick one reader contribution as our Star Letter.
This week’s Star Letter goes to Brian Hall for his post on Tenants will lose out under buy-to-let tax cuts and regulation pressure.
I fail to see how reduced profitability for landlords represents a threat to tenants. I suppose some might think that the result will be higher rents, but the market is paying about as much as it can. Ultimately, landlords will take the hit.
If sufficient numbers of buy-to-let investors bank their profits and vacate the sector, a sudden increase in the supply may trigger a property price correction, which will further damage landlord profitability and cause more to vacate.
This market-driven, positive feedback loop (or vicious circle) is exactly the reverse of the bullish conditions that have caused the rapid growth in the private rental sector in recent years. Boom and bust is the way of the property market.
IMLA is saying what one would expect. But if the buy-to-let sector is hit, its broker-oriented lenders will switch to first-time buyers, or whatever is the next big thing. And it will be their highly geared, interest-only landlords that suffer most.
Aldermore Insights with Jon Cooper: Edition 4 – Budget 2025: Landlords feel the heat, brokers to steer the market
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