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That's already starting to an extent, I know a number of people who have been put off renting out their properties due to the new tax rules coming in. It isn't that profitable if the crazy equity gains aren't there.
The issues are whether the lack of flexibility will hit people. Will these local authority lets cover 3/6 month lets? Will they be in places people want to live? What about places out of London where the demand for rented property is lower?
On the flip side, what if you own a property but want to move to work somewhere else or move in with a partner? With a 90% tax on rental income it would be pretty much impossible to relocate temporarily.
aggi-
On the flip side, what if you own a property but want to move to work somewhere else or move in with a partner? With a 90% tax on rental income it would be pretty much impossible to relocate temporarily.
People would just do it under the table. Or you adjust the rules on absentee landlords, or whatever it's called by HMRC.
This is the boat we are in. Currently making a small loss if we weren't returning, next year it would be a slightly larger loss due to the tax changes.
Granted our original mortgage was never intended to be for a BTL investment, so it's not the best benchmark but I'm not sure sure how many people could go out today and make a decent return on BTL.
EDIT : obvs not doing anything under the table, as it isn't worth it.
hugo7
Residential property shouldn't be an 'investment' at all.
Ramp up to 90% tax on rental income, receipts ringfenced for local authorities to purchase/build new housing stock. Local authorities to charge based on servicing house build/purchase cost over average working life (so probably something like 40 years) ie. longer than usual mortgage terms.
Make private landlording un-profitable and uncompetitive and it will go away.