George Osborne sensed he was onto a winner when he moved to raise stamp duty on buy-to-let homes by three per cent.
The UK property market has long been a hot topic. Powers-that-be rarely let opportunity pass, and the chancellor’s move is one to allow the government to have a bigger slice of the pie.
The landlord tax hike will come into effect on 1 April. Sadly, it will not be quite as amusing as an April fool when it does - the stark reality of George’s stamp duty play is that it really is an assault on entrepreneurial Britain.
Without delving too much into politics, there is a very non-Conservative feel about it. It is also poorly timed – uncertainty over possible Brexit looms, and fears of a new recession are very much alive.
Why? We should underline something that it appears the chancellor has forgotten – buy to let is a key entrepreneurial activity in the UK.
While there are sophisticated players in the market, it is a business proposition which is open to anyone who has the drive to enter.
It helps thousands of people supplement their income and in many cases – although not enough in my opinion – replace employment completely. Handled effectively it can be a lucrative career, a business path with good expansion possibilities and yields.
In the age of zero interest rates and increased equity market volatility, it also makes it an investment route on which, while it is not without its own headaches, a safer plot can be chartered.
Scaremongering headlines suggest that as a result of the hike, some 200,000 landlords are primed to leave the market, bringing around half a million properties into play.
That projections does not sit well with me, although one added concern over the new tax levels is the damaging effect they could have on the wider market as everyone aims to beat the 1 April rush.
Despite it being an ill-thought attack, it should not be the death-knell for landlords – certainly not for other areas of the country. London has long been dead in this market but savvy property investors who do their research will look north, to places like Manchester where I have more than 100 properties and where there is better cash-flow, and up-coming areas such as Derbyshire.
Companies with 15 or more have certain exemptions from the tax, so it does spark the possibility of entrepreneurs treating buy-to-let even more seriously and establishing their own firms in which to do business from.
It will take time for the long term implications to filter through, but one thing remains clear – Number 11 should have been backing buy to let brave hearts, not seeking to tighten the grip.