When taxes were introduced to buy-to-let landlords in 2015, many worried that it would "cripple" the market and drive up rents. However, research by Generation Rent—a group which campaigns for secure, decent and affordable homes—has proven otherwise.
"Warnings of crippling rent rises have been confounded," says Dan Wilson Craw, the director of Generation Rent. "In fact, real rents (adjusted for inflation) have fallen by 2.8% in the same period. There is therefore no evidence that a reduction in the supply of rented homes has pushed up rents."
Instead, Craw argues that buy-to-let taxes have increased public revenue and focused the property market towards first time buyers; a group that has grown by 21% since the tax was first enforced.
"Landlords will seek to recoup their costs by hiking up rents," insisted the Association of Residential Letting Agents. "As a result, tenants will have to save for longer to be able to afford a deposit for a house, as more of their income will be eaten up by rent."
However, the recent study from Generation Rent render these predictions void. As Craw notes, "renters have little to fear from a housing market that is no longer a playground for speculators. If homes leave the private rented sector then so do the private renters who are now able to become homeowners. The balance of supply and demand is unchanged and so are rents."
The Chancellor of the Exchequer is due to deliver his budget on 29th October, and faces extreme pressure from the property industry to make a change.
A number of proposals are believed to be in consideration by the Treasury, including tax breaks for landlords who offer longer tenancies. However, there are also reports they are looking for ways to close loopholes where landlords have avoided paying higher buy-to-let taxes.
Vincent Burch offer a wide range of buy-to-let mortgages and can provide the latest rates. To find out more information, please give us a call on 01603 340644.