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Experts blast ‘nightmare’ Labour plan to block buy-to-let homes

Housing experts have blasted Labour plans to ban buy-to-let being used on new homes as a “nightmare” claiming it is unworkable and would harm tenants.

In its housing review, led by Sir Michael Lyons, Labour proposes handing councils the power to ban new build houses being left empty or used for buy-to-let.

Labour is proposing giving first-time buyers priority for two months in up to 50 per cent of properties.

But experts have branded the plans unworkable because councils would need to identify the intentions of all buyers, including those with cash.

National Landlords Association chief executive Richard Lambert says: “Without imposing new covenants or planning restrictions, which would risk scaring off investors, homeowners and lenders alike, it remains unclear how they could achieve this goal [of prioritising first-time buyers and blocking buy-to-let].”

He adds: “There is very little competition between landlords and first-time buyers. Restricting up to 50 per cent of potential buy-to-let transactions seems unnecessary when just 14 per cent of total mortgage transactions are either buy-to-let or buy-to-let remortgages, and often the types of properties that landlords and first-time buyers are attracted to are very different.”

John Charcol senior technical manager Ray Boulger says the changes would be a “nightmare” to enforce and hurt tenants.

He says: “Why does Labour want to discriminate against tenants? Although there will be a number of people renting who want to buy, there will be some who choose to rent or have no chance of buying.

“Tenants will have less choice and rents will go up because there is less rental property. If you prioritise one part of the market over the other then you are putting the other at a disadvantage.”

Buy-to-let consultant David Lawrenson says: “It seems impractical. It creates political risk which puts off investors which creates fewer buy-to-lets and pushes up rents.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Change/amend tax legislation for foreign purchase! Stop new builds being sold ‘Off Plan’ to overseas foreigners or make sure like the rest of us they have to pay Stamp Duty, Income Tax on rents received and CGT on profits from sales. That will help!

  2. ban foreign buyers full stop i say.

  3. Penelope Booth-Smith 17th October 2014 at 11:37 am

    I find it strange that anyone should want to polarise our choices to a) ‘buy it’ or b) ‘rent from the council’, which seems to be the underlying implication of Labour’s wish to restrict buy-to-let purchase. Home ownership is a wonderful investment for many – but for some is not the right choice, as Ray Boulger says. There are people for whom home ownership has been financially disastrous, whether from negative equity, or overstretching their finances, or choosing to spend their disposable income on lifestyle rather than saving enough to deal with the responsibilities that home ownership brings. In my opinion, council property should be there to assist those whose low income means they have difficulty renting privately – as part of the welfare state. Others who are not in a position to buy, or do not wish to, should have a thriving buy-to-let supported private rental market to give them good options.

  4. Penelope I am not in disagreement, but affordability in London is a prime example where properties have escalated beyond reasonable means, mainly because of demand from overseas purchasers. Why should those who make no contribution to our economy also obtain superior tax treatment?

  5. Although UKIP’s housing policy needs further development the specific policy I have copied and pasted below is likely to be more beneficial to FTBs in particular, but also others, especially in London, as it directly reduces the amount of cash required to buy. If an FTB is a high priced area buying at over £250,000 only has to find a 5% deposit for certain new build properties, coupled with the use of Help to Buy 1, rather than needing 5% + 3% stamp duty land tax, the abilty to buy for those with adequate income but limited savings will be significantly improved:

    UKIP policy: “Houses on brownfield sites will be exempt from Stamp Duty on first sale and VAT relaxed for redevelopment of brownfield sites.”

    Hopefully in his Autumn Statement George Osborne will be prompted by The Scottish Parliament’s changes to the stamp duty system to do something similar, but with very different thresholds and rates, and at the same time he should consider pinching this UKIP policy!

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