Is it a problem? As is usual for this kind of tax policy, not for the very rich. But for the rest of us in the not-super-wealthy category, which will be most of us, the ramifications are different.
While I appreciate Labour’s desire to make everybody a homeowner – albeit of just one property – the fact is not everybody wants to, nor can afford to, become a homeowner. And that is where the rental market is of prime importance.
Some people need, or want, to be mobile. They need to be able to take up job opportunities in other areas, or move closer to families should circumstances change – and maybe they don’t want to buy a house with all the associated fees, costs and financial commitment involved. Maybe they want to rent and maybe they want to rent from a private landlord rather than live in a council house or social accommodation.
Choice is not a bad thing.
But future investment in the rental market from newer younger landlords is now looking unlikely given the increase in the already huge upfront costs.
As I write this, I’m waiting for the call to tell me my sale has collapsed. I am selling a property to an investor who had set up their rental business in the correct way. They have a company – which can still claim the full mortgage interest relief – and they have a hunger to fill the growing need for rental accommodation in our country.
If my sale collapses it will mean my property is likely only to appeal to the owner-occupier market – who won’t have to pay any tax at all if I sell to a first-time buyer. But when you think about that single sale across the rest of the market, you can start to see the implications for what will happen next.