Buy-to-let investors have been left reeling by news in the Budget that a tax relief worth £14 billion to British buy-to-let landlords is set for the chop. George Osborne announced that as part of a plan to 'level the playing field' between first time buyers and professional investors, many landlords will no longer be able to offset all of their mortgage interest against their tax bill.
At the moment, investors pay tax on the income they get from buy-to-let properties, but they can subtract a number of things from their rental income first - including the cost of any interest payments on their mortgage. If they pay tax at 40%, they therefore get 40% tax relief on their mortgage interest. In future this tax relief will be limited to basic rate tax.
The change was positioned as a boon for first-time-buyers who now compete for properties with people facing the same mortgage pressures as they do. Lucian Cook, head of Savills UK residential research says: "This is likely to provide some comfort to younger generations of aspiring homeowners"
However, it means that a number of buy-to-let investors will end up with higher tax bills. Jonathan Hopper, managing director of Garrington Property Finders warns: "The Chancellor has just delivered what could be a knockout blow to many 'would-be landlords'. It could also create a panic amongst existing landlords, who may rely on the rental income from their property portfolios to top up their savings and cover day to day living costs."
Osborne admitted that he was aware that a large number of buy-to-let investors have worked hard and saved carefully to afford this investment, and he didn't want to shock them with the change, so it will be implemented in four years' time. It gives them chance to plan how they will make up the shortfall in their budget.
%VIRTUAL-ArticleSidebar-tax% The impact
The impact on landlords and tenants will ultimately depend on what landlords decide to do as a result of the changes
Jane Guaschi, Business Manager at Direct Line for Business warns: "The reduction of mortgage tax relief for owners of buy-to-let properties will have a significant impact on the income generated by landlords across the country. It may see landlords forced to increase rents for tenants."
Jonathan Samuels, CEO of Dragonfly Property Finance admits this is possible, saying: "There are concerns that landlords will simply bump up rents to cover the hit. This may well happen in some cases but market forces and the rents people are prepared to pay are likely to offer a degree of resistance."
There's also the concern that some people will not be able to balance the books without this tax relief, and will be forced to sell. Meanwhile others will decide to spend less maintaining their properties lowering the standard of living for private tenants. Hopper warns: "At a time when rents are rising and the country is crying out for an increase in good quality rental accommodation, the timing of this policy seems questionable and ill-thought out."
However, the experts have already started pointing out that there are ways around the changes. James Hender, partner and head of the private wealth group at Saffery Champness, says: "Couples looking to buy properties as long term investments may now be considering the lower earner as the owner going forward."
Samuels concludes: "The buy-to-let market is part of the fabric of UK society, but at the same time so is home-ownership. It is a tough balancing act and only time will tell if the Chancellor has got it right." If he hasn't, then buy-to-let investors stand to pay a high price for Osborne's experiment.
In Scotland, Edinburgh is seen as a city with huge growth potential. In 2014, prices in Edinburgh were up 10% in a post referendum boom that shows little sign of slowing down.
Local agents are not expecting quite such stellar growth for the next 12 months, but they think price rises will be well above the average predicted for the whole country.
Rightmove named this as the area where it expects house prices to grow the most over the next five years. It says that over this period there will be a huge number of people moving out of London in order to afford to get onto the property ladder. They want a reasonable commute combined with plenty of attractions in the local area, and Southampton offers all this. With relatively affordable housing stock, it's a prime candidate for growth.
Luton was Rightmove's candidate for the second biggest house price rises over the next five years. It emphasised that this isn't a mater of opinion, it is the result of crunching the data.
Luton is another major beneficiary of the move out of London, and while it is arguably not as attractive a place to live as Southampton, it's only 23 minutes into central London - which rivals some of inner London's commuter times. With average prices of £179,368, it's clearly a far more affordable option, and the area has already started to show signs of a boom.
This was the third area suggested by Rightmove. As with Southampton, it is well positioned for London commuters, and also has huge local attractions.
A survey last year asked young professionals to name the place they would most like to live, and Brighton and Hove were the only areas that appeared on the list outside London.
One of the reasons it's not higher up the list is that houses are already on the pricey side, with an average cost of £338,956 - up 13% in the past year alone.
There may be few people who grow up with the dream of living in Swindon, but the electrification of the rail line to London will bring travel times down across the West Country, so Swindon becomes part of the outer commuter area.
Given that the average property costs £168, 968, it's easy to see why Swindon will be a popular option for commuters on a tight budget.
Bath is also going to benefit from electrification of the line, because the commute to London will fall to a manageable 70 minutes. The beauty of the city - along with a vibrant social and cultural life - makes it a clear choice for more long-distance commuters.
Of course, with an average asking price of £374,617, it's not a tremendously cheap place to buy, but the geography of the city restricts development, so these prices are expected to rise still further.
Property Frontiers says that the booming house prices in Oxford are set to get even higher. At the moment, travel to London takes 60 minutes, but this will reduce even further in 2016 when the line is electrified. Prices in the most desirable parts of the centre aren't much cheaper than London.
However, further out there are pockets of affordability, and when the Water Eaton station opens in 2015 it will open up areas to the north of the city too.
Manchester has seen enormous property price rises over the last couple of years, and Property Frontiers expects this to continue into 2015.
Other commentators are expecting the growth to slow over the next few years, especially given the gains made since 2012. However, demand for properties remains buoyant, and with the growth of the local economy, price rises seem inevitable.
Rising prices in London have pushed buyers further and further out of the centre, so estate agents are now claiming zone three as 'the new zone 2'.
Savills believes that the biggest gains over the next five years will be the less glamorous districts - putting the South and East in the frame. Gritty areas that could benefit include Ladywell, Streatham and Catford in the south, and Leytonstone, Forest Gate and Walthamstow in the east.
Cambridge could also perform well. It has already had house prices lifted by the growth of tech companies to the north of the city, and the arrival of pharmaceutical headquarters will help push prices up further.
In 2016 a new rail service from the city to the science park will keep prices rising, and beyond the opportunities presented by the local economy, Cambridge is also part of the 'outer commute' area of London, which Savills expects to shoot up in value over the next five years.