A new campaign says it’s not just the buy to let sector that will be penalised by changes to landlord tax breaks proposed by the government - estate agents, too, are predicted to suffer from fewer sales to property investors.
A new website - www.saynotogeorge.co.uk - has been set up a nucleus for opposition to Chancellor George Osborne’s proposals, which will limit tax relief for landlords to the basic rate of income tax, currently 20 per cent, even if the individual property owner pays a higher rate of tax.
The new website explains how the tax proposal may hit different people in different ways - from letting agents to landlords to tenants - and this is its section for estate agents:
Estate Agents will initially be affected by the serious downturn in the Buy-To-Let Market.
Currently 15% of mortgage approvals are for BTL’s and this market is set to disappear.
That will lead to the House Builders scaling back production thus there will be far fewer new-builds to market. In a time when Agents are struggling for stock this will not be good news for them.
When Landlords start off-loading properties it’s possible that prices will drop, particularly in areas where there is a high percentage of rental houses. We could enter another period of downwardly-spiraling house prices resulting in some offices or complete chains of agents disappearing.
To understand the scale of the problem it's important to look at the numbers. The Bank of England said that only 1 in 5 Landlords will be affected but we think this is rubbish.
However if we take this to be the ratio of Landlords that are really seriously affected, and we agree with the Governments figure of 2 million Landlords in the country, then we're talking about 400,000 people. If they were to sell off only 2 properties each then that's 800,000 properties hitting the market. It might solve the issue of shortage of stock but what will it do to prices?
Alas the problem could be even worse than that. If we say that the Pareto (80/20) rule applies here and 20% of the Landlords own 80% of the rented properties, how many houses will actually come to market? It's a frightening thought.
The building industry have only really just got back on their feet from the recession. How long will it take for them to recover from this?
The campaign website also links to a petition which Letting Agent Today has reported on in recent weeks.
There are now well over 11,000 signatories to the petition - you can see it here - and if it goes on to receive 100,000 signatures by late January the government will be obliged to consider giving the issue additional parliamentary time.