The government’s cut to tax relief for buy-to-let investors will hit capital values but could boost institutional investment into the private rented sector.
The share prices of the major house builders including Barratt, Persimmon and Taylor Wimpey dropped markedly following the announcements. Buy-to-let investors are significant purchasers of flats from the volume house builders
Deloitte Real Estate senior tax partner Phil Nicklin said: “A fairly large part of the landlord community may be removed, leaving a gap for PRS investors.”
Reza Merchant, chief executive of PRS developer The Collective, said: “The product PRS developers deliver is very different from buy to let, but the customers are the same so we have had talks about how the changes to buy to let could provide our sector with a boost.”
The tax relief changes were announced alongside a series of clampdowns on non-doms which are expected to hit the prime end of the London market.
The combination of buy to let becoming less attractive and the non-dom clampdown are expected to place further downward pressure on capital values.
