George Osborne’s message to buy-to-letters: “don’t”

We’ve made our views on buy-to-let pretty clear recently. And it looks like the chancellor agrees, says Merryn Somerset Webb.


George Osborne: The message he is sending couldn't be clearer

We've made our views on buy to let pretty clear here over the last few weeks. We don't have the moral problems with it that some do in the right circumstances owning property and renting it out is a perfectly acceptable investment activity. However, given the political and economic writing on the wall, we have long thought that getting into it would be a bit nuts.

Prices are high; yields are low; the change to the tax relief on mortgage interest looms large. The FCA looks likely to intervene in the loans market just as it has with residential mortgages. And now from April 2016 there is to be a new three-percentage-point stamp duty surcharge on any purchases. Had that been in place for the first three quarters of this year it would have cost the average buyer an extra £4,565 in stamp duty (numbers from mortgage lender, Kensington) That's real money.

Crucially, it is also money that borrowers have to come up with in cash, on top of their deposit you can't borrow your stamp duty. That will (obviously) cut the number of people able to buy and bring prices down (or at least stop them rising). Good perhaps for residential buyers; not so good for buy to let investors.

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The last time we looked at this we ended up with a clear message (it's a bad idea). If you aren't listening to us, you might think about listening to George Osborne. The message he is sending couldn't be clearer: don't do it.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.