Boost for local first-time buyers as Lib Dems force government U-turn in tax breaks for buy-to-let investors

02.01.06

Edward Davey, Liberal Democrat MP for Kingston and Surbiton, has claimed victory for local residents after Gordon Brown performed an astonishing U-turn in the House of Commons on Monday.

Following pressure from Liberal Democrat MPs, Mr Brown admitted defeat and changed the rules relating to Self Invested Pension Plans (SIPPS) which, if left untouched, could have led to rocketing house prices in Kingston and Surbiton as wealthy investors purchased buy-to-let homes with pension tax breaks.

In 2004 the Government relaxed the rules on SIPPS which meant that people could purchase a property, put it into a pension product known as a SIPP, and then receive a generous 40 per cent tax break. The rules were meant to start in April 2006, but have now been scrapped in line with Liberal Democrat proposals tabled in June.

Commenting on the meeting, Edward Davey said,

“This is great news for those wishing to climb on to the housing ladder in Kingston and Surbiton. We all know that flats and houses in Kingston and Surbiton are an extremely attractive prospect for wealthy investors so I am delighted our campaign has forced the Government’s hand.

“Offering rich investors a 40 per cent tax break to buy a rental home here could have priced even more local people in Kingston and Surbiton out of the market completely. What we need in Kingston and Surbiton is good quality, affordable housing that is available to those who live and work in the community.

“I am delighted that concerted Liberal Democrat pressure has shown the Government the error of their ways. Of course this is just the tip of the iceberg when it comes to securing affordable housing, but at least the Chancellor’s U turn offers people in urban areas like Kingston and Surbiton some protection.”