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A new article in the Times by economist David Smith has pointed the finger at George Osborne as to why the housing market is in decline! It suggests that the down-turn has started in London and the South East and will radiate out across the rest of the country.
Excerpt:For those of us who spend a lot of time warning that if you raise taxes it has a negative effect on economic activity, the housing market in London and the southeast has provided something quite rare in economics: a real-life experiment. Taxes have gone up and activity and prices have come down. George Osborne is now editor of the London Evening Standard, but the actions he took as chancellor, together with Brexit, have been responsible for the downturn in the London market.
Mr Osborne recently took to Twitter to defend the stamp duty reforms he announced at the end of 2014, because they have led to a fall in revenues from the tax. They were always intended to be a tax cut for the majority, he said, and were expected to result in a fall in the tax take. That is true, but the new rates — 10 per cent on the portion between £925,001 and £1.5 million and a 12 per cent marginal rate above £1.5 million — were a piece of precision bombing aimed at high-priced London and the southeast.
As big a tax effect appears to have come from Mr Osborne’s assault on buy-to-let landlords, driven by the political goal of tilting the balance away from them and in favour of first-time buyers. I have no axe to grind on the part of landlords, but a tilt does not do justice to it.Tories went from celebrating the revival of the private rented sector after decades of socialist control to knocking it on the head. Buy-to-let landlords face higher stamp duty, a drastic change in the tax treatment of mortgage interest and other changes that make buy-to-let significantly less attractive, even no longer viable. When Mr Osborne made these tax changes, he did not want and did not expect Brexit and no doubt in his quieter moments David Cameron wishes that he had listened to his old ally. Add Brexit to the mix, however, and it has been a triple whammy for the housing market in and around the capital.The article concludes:" .... there is nothing more certain than that higher taxes do damage".Full/source article The article mentions Osborne taking to twitter a few days ago to defend his tax policies:SEE ALSO - Net loss of 133K rental homes in coming yearUP NEXT - RLA research by PEARL - a year in reviewDON'T MISS - 1 in 4 landlords to exit due to Section 24NOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
So the long and the short from "that dreadful weasel" was a tax hike introduced to create a fall in the amount of tax taken?!It must be nice living on another planet where nothing you do is ever wrong. Full of policiticians no doubt.
Oh don’t you know this is the level playing field
The trouble is there is a storm building and it’s going to be covered by negative equity and no properties to rent
Of course the govt is so stupid it won’t do a u-turn
It's far too thick skinned to admit they are wrong
Learn Change and Adapt ?????
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I think they'll have no choice to do a U-turn in two years. It's going to be mayhem out there!
"Change is a prerequisite to longterm survival".
The establishment is rigged so that the rich stay very rich, and the poor get poorer.
The only uturn I think will come is if we offer longer tenancys which I would be happy to give
they can’t just back down unless they have something in return
its sheer madness what’s going to happen
Indeed, from twitter this morning:
its just starting
As we all know buy to let lending is dropping.
I'm interested to know if the figures include the redemptions by landlords or is it just new/ remortgage figures?
Remo's must be accounting for quite a lot I think? BTL lending has been on the decline since the +3% SDLT hasn't it?
Looking at it objectively and excluding BTL, if what Osborne says is correct, that 95% of families will pay less with his changes to stamp duty the article does not accurately reflect the true problem, that is prices and stamp duty rates are too high generally rather than the changes to the basis of calculation.
The change in market activity is beyond what would have been caused exclusively by S24, it hasn’t helped, but it is not the sole issue, prices have just become too expensive and people have started to take stock and sit on the sidelines.
I think your right
Im sitting back and watching the market
affordability is the key
the market has risen to fast over a short period and it’s run out of steam
when you see developers renting property they can’t sell in the SE it sums up the market