Having read the paper, I was disturbed to find that tax changes will apply to a “Let to Buy “ transaction. This is where someone has decided to rent their existing residential property and is buying a new residential property as their main home.
There are many circumstances where a person will seek to do this.
1) They may be relocating with work and are unable to sell their property, so decide to rent it. At the end of the day they are still buying a residential property to live in as their main residence.
2) They need to move due to divorce, or the current home is in negative equity so rent it instead.
3) They may move but keep the property for family members to live in.
They may have just recently bought their house and paid Stamp Duty but for personal reasons or their job need to move. Why should they be penalised again?
Most property professionals and clients we have spoken to post the announcement are under the impression that the tax only applies if you are buying a second home (holiday home etc ) or a Buy to Let property.
No one I have spoken to is under the impression letting an existing property will be taxed at the higher rate.
There is a new regulation coming into force in March called the Mortgage Credit Directive. This will categorise people letting to buy as “consumer Buy to Let customers”, ie where they are not professional landlords and are renting their properties due to circumstance and not as investment. However, under the proposed new tax rules, HMRC will tax them as if they are investors?
I would urge a rethink on this unfair element of the new rules to allow genuine people to move on with their lives. At the end of the day, whichever way you dress it up, you are taxing them for living in their own residence just because they are proposing to rent an existing one, even if it is as a last resort.
MD Jackson Potter