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End tax break for buy-to-let

8:06am Friday 29th June 2007

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TAX relief for buy-to-let investors should be "scrapped" or "seriously curtailed", according to a Labour councillor.

Investors can claim tax relief against interest on buy-to-let mortgages - something withdrawn from conventional home-buyers in 2000.

This has led to claims that buy-to-let landlords have a huge advantage over first-time buyers.

Now Coun David Horton is calling for a U-turn by his own Government which introduced the policy.

Coun Horton, shadow executive councillor for housing, said: "If you can afford to buy a second property as a buy-to-let or to use as a second home, you should not get tax relief on it.

"York people, especially first-time buyers, are struggling to get their foot on the housing ladder.

"I don't see why investors with lots of cash should get tax breaks over normal people on low incomes struggling to get their first home."

Mr Horton said he was hoping to put pressure on the national Government to change its policy through York council's housing group.

The Press recently reported the buy-to-let market in York had seen a massive boom and that first-time buyers were being squeezed from the market Geoff Stericker is a partner in The Buy And Let Property Shop, in Whip-Ma-Whop-Ma Gate, York.

Mr Stericker said the buy-to-lets had now virtually taken over the first-time buyer market because people were looking to rent rather than buy.

He estimated that, in York, buy-to-lets represented about 50 per cent of the first-time buyer market.

Joan Sinclair, of Rawcliffe, York said: "It is a terrible shame first-time buyers are being priced out of the market.

"It just does not seem fair that buy-to-let investors should get tax relief when first-time buyers don't.

"Either they should both be given tax relief or it should be scrapped for buy-to-let investors."

Ben Hudson, a partner with Hudson Moody, York, said: "It would be marvellous to have tax relief for first-time buyers as well as for buy-to-let investors.

"It was a Government decision to scrap it and, unfortunately, the Government would lose a lot of revenue if they did so. If tax relief for buy-to-let investors was removed it would mean there would be a lot less properties on the market.

"Having tax relief has meant there are a lot more rental properties on the market, especially in the commercial sector.

"These properties are in much better condition than the dingy bed sits that used to be available in earlier years."

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Your Say YourYork Press

Wendy, York says...
8:48am Fri 29 Jun 07

It's ridiculous that rich people can buy extra properties and get tax relief while the rest of us struggle without any help!

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Romper Stomper, York says...
8:50am Fri 29 Jun 07

If anything first time buyers should get the tax releif and buy to let investor shouldn't.

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Wendy, York says...
8:52am Fri 29 Jun 07

My point exactly!

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BL, says...
9:12am Fri 29 Jun 07

Too right! About time someone spoke up about this. The next thing they do after buying is usually to try and extend the house to get more money from more people. A planning application to extend a Semi in a quiet cul-de-sac was recently turned down (thankfully). The house is currently rented to students (nothing particularly wrong with this) and, if the application had been successful, it would have added the space to have another 4 or 5 people in the one house!

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sami..big chief.mamma., york says...
9:59am Fri 29 Jun 07

Does this mean that those of us who have worked hard all our lives and raised children to do the same are to be outlawed for using our hard earned cash to buy property up on our childrens behalf,and rent it out in the short term, and thus eliminate the need for them to be dependant upon "social housing".
Oh behave people.Get a sense of self respect and stop being dependent on others.
Personally i dont have an argument with the current tax relief system either way.If they give it i will take it,but if not thats not a problem.The way property prices go up will always leave me in pocket.
Just for the record i started out a teenage mother renting a room for a tenner a week in 1980 with no help from anyone whatsoever.
I quickly grasped the idea that if i wanted my kids to do better for themselves than growing up just existing on a sprawling council estate as i did i would have to set an example.I work hard as does my husband.We have never claimed benefits or been out of work voluntarily.
I own 3 properties incuding the family home and my son who is 25 also owns his own home and has 3 children to support.He also works very hard doing shift work.
So when you assume that anyone who has a buy to let property is somehow doing an injustice to the social housing/property market just take a look at the way you view things.
We dont all get handed things on a plate or expect something for nothing.

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Wendy, York says...
10:12am Fri 29 Jun 07

It's not that people shouldn't buy to let - it's just they shouldn't get tax relief!

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Sharkey, York says...
10:38am Fri 29 Jun 07

If "sami..big chief.mamma." and her BTL ilk weren't hoovering up all lower-end property, they wouldn't have any need to "buy propery up on their children's behalf". Maybe their offspring would be able to afford it themselves. Oh, the irony.

Maybe "sami..big chief.mamma." should consider herself forunate that her previous generation were socially responsible in that they continued to build housing as needed for future gererations, rather than trample over thir children to deny them the opportunity they were afforded themselves.

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Fat Harry, says...
10:46am Fri 29 Jun 07

sami..big chief.mamma. seems typical of so many who oppose state intervention except for their own benefit.

They think it's wrong to use public money to build council houses, but that it's OK for the same public money to be used to subsidise their attempts to get rich by letting property at inflated prices.

This iniquitous subsidy should end, there should be an end to the sale of counsil houses, and the government and local councils should institute a programme of council house building.

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T, York says...
11:00am Fri 29 Jun 07

This is a national issue which has already been raised with the government. When will councilors realise they are here to deal with local issues - now get back to sorting out council housing

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ohsotired, york says...
11:40am Fri 29 Jun 07

I agree wholeheartedly with Fat Harry!

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ohsotired, york says...
11:41am Fri 29 Jun 07

I agree wholeheartedly with Fat Harry!

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Frankie, York says...
11:48am Fri 29 Jun 07

Oh please, not everyone who buys property for rental is rich! They work hard and want an investment for their future. The state pension wont be much use will it! I'm sure some landlords will charge an inflated rent, but you'd be surprised at how many rents would not even cover the mortgage repayment. If tax relief goes then the extra cost would be passed on to the renter! I agree however there should be some tax incentive for first time buyers now.

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Sharkey, York says...
1:03pm Fri 29 Jun 07

Frankie says "you'd be surprised at how many rents would not even cover the mortgage repayment"

This is very true in many areas of the housing/BTL market where the income does not cover the mortgage interest. Investors are happy to live with it because of capital appreciation, i.e. amateur investors still piling in regardless. This is behaviour characteristic of any asset price bubble. Once upon a time, banks would insist rental income covered 130% of the interest payment. Not any more. Lax lending standards are a key driver in the housing boom.

Amateur landlords with their large property portfolios will sooner or later find out that property does not always go up in value. Those that are highly geared through remortgaging will come to understand what "risk" actually means, and how ruinous a highly geared investment can be on the way down. At that point, first time buyers will be able to start to breathe a sigh of relief. The day can't come soon enough.

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clifton moor, cliftonmoor says...
1:14pm Fri 29 Jun 07

Don't forget that buy to let have to pay tax on the profit when they sell the house. Probably 40%. Owner occupiers get the profit to keep tax free. So it is not as unfair as it first appears.

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sami..big chief.mamma., york says...
5:36pm Fri 29 Jun 07

Ouch!!!! or maybe a bit more had graft by those who want to keep the dependency state running at the expense of the taxpayer would generate more affluence to the majority and thus the "real needy" would benefit more rom the system which is meant to be asafety net and not a means to exist as of right.
I believe everyone should maximise their potential and not look for excuses for their own failings.
Its so easy to blame a successful thrifty person who chooses to spend their hard earned capital on bricks and mortar as a better way of investing for the future than leaving it in the banks etc where it takes an average of 30-40% longer to generate an equal return.The fact that i then choose to assist my 'offspring'shows a sense of moral responsibility and ensures future generations will end our line of dependency if they stick to the same principles of hard graft and prudent spending.
Its a bit like being the chancellor really.

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sami..big chief.mamma., york says...
5:42pm Fri 29 Jun 07

Ouch!!!! or maybe a bit more had graft by those who want to keep the dependency state running at the expense of the taxpayer would generate more affluence to the majority and thus the "real needy" would benefit more rom the system which is meant to be asafety net and not a means to exist as of right.
I believe everyone should maximise their potential and not look for excuses for their own failings.
Its so easy to blame a successful thrifty person who chooses to spend their hard earned capital on bricks and mortar as a better way of investing for the future than leaving it in the banks etc where it takes an average of 30-40% longer to generate an equal return.The fact that i then choose to assist my 'offspring'shows a sense of moral responsibility and ensures future generations will end our line of dependency if they stick to the same principles of hard graft and prudent spending.
Its a bit like being the chancellor really.

Report this post »

sami..big chief.mamma., york says...
5:57pm Fri 29 Jun 07

Ouch!!!! or maybe a bit more had graft by those who want to keep the dependency state running at the expense of the taxpayer would generate more affluence to the majority and thus the "real needy" would benefit more rom the system which is meant to be asafety net and not a means to exist as of right.
I believe everyone should maximise their potential and not look for excuses for their own failings.
Its so easy to blame a successful thrifty person who chooses to spend their hard earned capital on bricks and mortar as a better way of investing for the future than leaving it in the banks etc where it takes an average of 30-40% longer to generate an equal return.The fact that i then choose to assist my 'offspring'shows a sense of moral responsibility and ensures future generations will end our line of dependency if they stick to the same principles of hard graft and prudent spending.
Its a bit like being the chancellor really.

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Sharkey, York says...
6:13pm Fri 29 Jun 07

Three identical posts when most people make do with just one, "sami..big chief.mamma.". Are you planning to rent two of those posts out to someone else?

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psychicallychallenge d, york says...
6:24pm Fri 29 Jun 07

Why is it that people only object to others activities when there is an element of envy involved.
So what if someone has earned enough cash to buy more than just the roof over their heads.
Good luck to them i say
If the opportunity comes you should take it...Whether its a win on the lottery or a legacy from a rich aunty.
If the tax man gives you a little break along the way then take it.
Why do people only **** about folks better off than themselves.!!!!!!!

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Sharkey, York says...
6:35pm Fri 29 Jun 07

An extremely poor analogy, psychicallychallenge
d, if I may say so. A lottery win is a lucky jackpot in a game everyone willingly parts with their pound or two. Investement in BTL, on the other hand, is the parisitic activity of individuals who add nothing of value to society as the result of their investment, but seek to cash in at the expense of a later generation, in some cases even trying to claim they're helping those who they've been partly responsible for pricing out.

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psychicallychallenge d, york says...
8:16pm Fri 29 Jun 07

sharkey,
i beg to differ with you on that one,i say if a person is able to afford to improve their lot then good luck to them.
Investing in the future via property ownership and subsequent rental is a sound financial route to take and ensures a constant supply of rental property in the private sector of the market.
In fact in a democracy it is the way forward for those lucky enough to get themselves into that position and they have nothing to feel parasitic about.
Parsites feed off the backs of others just as people incapable of conducting productive lives without dependency feed off the taxes of the grafters.

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Sharkey, York says...
8:35pm Fri 29 Jun 07

I guess we'll have to disagree on this one then...

Setting aside the wisdom of investing in an asset at the top of a boom, your argument that it "ensures a constant supply of rental property in the private sector of the market" can easily be seen as invalid simply within the context of this news story. BTL investors are forcing would-be first-time buyers to rent rather than have the opportunity to buy their own homes. Landlords are trampling over future generations, including their own children, to line their own pockets. Legal it may be, but morally it's highly questionable.

I also believe my "parasite" comment is valid. These people are feeding off future generations. There are parasites within other elements of society as well, as you rightly point out, but that in no way vindicates the behaviour of the BTL brigade.

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andyb, york says...
7:24pm Sat 30 Jun 07

Sharkey is right. This situation exists in Poland, where wages are low and the new rich have bought up property and inflated house prices out of most peoples reach. Sami is only kidding herself, I detest people who think they are the only ones that work hard.

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