Buy-to-let restricting first-time buyers

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The level of tax relief offered to buy-to-let investors may be restricting the availability of housing for first-time buyers, it has been suggested.

According to the Chartered Institute of Housing (CIH), first-time buyers are being presented with affordability concerns as buy-to-let customers are given generous tax benefits.

At the institutes annual conference, president Paul Diggory claimed that the "phenomenal growth" in the buy-to-let market is inflating house prices out of reach of first-time buyers.

"The government has acknowledged that there is an acute lack of affordable housing across the country so it does not make sense to still offer tax relief to those who buy simply to rent," he said.

"Buy-to-let owners have a financial advantage over those trying to buy their first home, as well as pushing house prices even higher."

Mr Diggory added that many buy-to-let homes are left empty as investors aim to make profit on capital gains only.

He suggested that many recent developments include rooms with "no lights on" at any time, hinting that there may be no actual tenants.

While he recognised that local authorities have the power to tackle the issue of homes left empty, Mr Diggory stated that little is being done to help provide affordable accommodation for first-time buyers.

He quoted figures from 2006 showing that the buy-to-let market grew by over half (57 per cent) year-on-year to equal 11 per cent of all new lending in the 12-month period.

Some £100 billion was lent to investors over the course of the year, with tax relief available to offset letting agent fees, repairs and mortgage interest.

But the CIH points out that relief does not apply to improvements such as installing double glazing, which effectively removes any incentive to raise the standard of a property.

Mr Diggory proposed a flexible tenure system which could allow tenants to gradually purchase the property in which they live, without punishments if they hit a period of financial tightness.

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