I was watching the Budget with interest and was disappointed to see George Osborne limit the mortgage relief on buy to let mortgages.  It is wrong to say that buy to let investors cause issues for first time buyers and this avoids dealing with the hub of the problem that first time buyers find it difficult to raise a deposit.  I have been campaigning very hard for the creation of a first time buyer fund – effectively a guarantee by the Government to increase the availability of 95% mortgages with the purchaser providing a 5% deposit, the bank lending 95% but the Government guaranteeing 5% limiting the bank’s risk to 90%.  This could be funded by means of a change to the Capital Gains Tax Rules meaning that if someone sold their sole or main residence within a 5 year period of purchase then a certain percentage of the gain, tapered over a 5 year period, would be paid in Capital Gains Tax.  I think that the Chancellor’s attack on buy to let investors is misguided, could have serious consequences for the property market as a whole, will limit the amount of properties available for people to live in (remember there is still a huge shortage) and will in fact raise very little money.

The Chancellor has missed a golden opportunity to put the UK housing market on a more solid footing.  I will continue to keep you updated.

Lindsay Darroch
Partner – Head of Property

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