The government’s 2017 decision to remove mortgage interest relief for buy to let properties was a killer blow for many landlords. Some, no doubt suffered an apoplectic fit on hearing the news. Others would have have taken a long, hard look at their margins, and sold up. Most however, would have simply jacked up the rent to compensate.
Tenants were forced to pay more, and the reputation of landlords as money grubbing parasites was cemented even more firmly onto the nation’s collective consciousness.
At least, that’s the argument put forward by Mark Homer, proud buyer (but not necessarily owner) of more than 600 properties, and developer of a “complex, secret algorithm that takes all human error out of buying residential, commercial and multi-let property.”
In a petition started two months ago, Mr Homer demanded that the government, “Reintroduce full mortgage interest relief and drop the 3% stamp duty surcharge.”
His argument is a compelling one. Making BTL more difficult and expensive for private landlords forces them to sell up, and drives up rents across the board.
And evidently, a great many people agree wholeheartedly. There are currently almost 20,000 signatures on the petition. If it reaches 100,000, the petition will be debated by parliament.
It’s not known what effect repealing the mortgage interest will have on Mr Homer’s own property investment businesses, the net worth of which is a massive £263,700.
There’s no doubt that the phased withdrawal of mortgage interest tax relief is having an effect on the UK’s 2.5 million landlords. But is it actively driving up rents? Data collated by the Deposit Service says no. Rents dropped across the UK dropped by 0.5% in the first quarter of 2018, while in London, that figure was a staggering 1.4%.
London, coincidentally, is where most of the petition signatures are coming from. Another coincidence is that it is has a greater proportion of renters than anywhere else in the country, as well as the highest rents by a significant margin. Could it be that the tenants, who face the prospect of never being able to own their own homes, are signing up to help their landlords out? We couldn’t possibly speculate.
HMRC has said that only around one in five landlords will pay more income tax because of the change. If their figures are accurate (and there’s no reason to think that they aren’t), Mr Homer’s claim that the change in the law is driving up rents in any meaningful way, is sheer nonsense.
It’s no secret that the government is trying to make things difficult for landlords in order to drive them out of the housing market. We’ve covered regulations, taxes, permits, and all of the other punitive and discouraging measures, time and time again.
And the government response to the petition, although somewhat ambiguous overall, states in the opening paragraph that the changes Mr Homer is petitioning against, “seeks to support first-time buyers and level the playing field for homeowners.” You don’t help first time buyers by making life easy for professional landlords of Mr Homer’s calibre.
We seriously doubt that this petition was created for the benefit of renters. It was created out of self interest for landlords, not for the greater good or to keep tenants from having fewer options and higher rents.
Mr Homer advises his followers to “Eliminate fear with data,” and we’d like to gather some data of our own.
Dear Readers, please take a moment and let us know you opinion.