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

1.34.16pm UTC (GMT +0000) Wed 7th Dec 2005

Eastleigh MP Chris Huhne has claimed victory for South Hampshire residents after Gordon Brown performed an astonishing U-turn in the House of Commons on Monday.

Following pressure from Mr Huhne and other 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 Eastleigh as wealthy investors purchased buy-to-let homes with pension tax breaks.

Chris Huhne's campaign was praised today in the national press, including the Independent and the Guardian.

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.

Mr Huhne led the Liberal Democrat attack on the rules in his front bench role as shadow chief secretary. He said: "This is great news for those wishing to climb on to the housing ladder in Eastleigh and other areas in South Hampshire. We all know that flats and houses 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 ordinary people in Eastleigh borough out of the market completely. What we need in Eastleigh and the rest of South Hampshire 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 just the tip of the iceberg when it comes to securing affordable housing, but at least the Chancellor's U turn offers people some protection."