Commenting on George Osborne’s buy-to-let clampdown, deVere Group’s managing director of their mortgages division, Mike Coady, says the Stamp Duty move will not help “Generation Rent” and will prove “ineffective for its purported aims” and will lead to higher rents.
Mr Coady’s comments come in response to the Chancellor’s announcement of a 3% additional stamp duty rate (SDLT) on buy-to-let properties and second homes in last week’s Autumn Statement. These tax charges come on top of the recent withdrawal of mortgage interest relief announce in the July Budget.
Denouncing the latest move as a “political stunt”, designed to show the government is listening to the desires of Generation Rent, to struggling first time buyers, to their parents, and to the anti-landlord sentiment that’s been peddled in the press.
Coady describes the government’s initiative to help as many people as possible to own a home as “commendable”, but he gives reasons as to why the measure will prove ineffective:
- “…the revenue raised by this initiative – £1bn by 2021 – is a nominal figure when given the scale and seriousness of the UK’s affordable housing crisis. To many it seems this is something of a political stunt. The government is wanting to be seen to be acting on this emotive and topical issue and is doing so by appealing to the politics of envy with buy-to-let landlords and second homeowner the targets.”
- “The second reason”, he says “is that it may trigger something of a ‘rush-to-buy’ phenomenon between now and April by those wanting to purchase a buy-to-let property racing to avoid paying the extra levy. This will, of course, push up prices in the short-term.”
- “Furthermore, in the medium to longer term, I don’t believe it will put off overseas or UK purchasers from investing in property,” he said. “Despite the 3% stamp duty surcharge, which is not ideal of course, most investors will still regard investing in property in the UK, especially in areas like London, the South East and Manchester, as an attractive and safe investment opportunity. In addition, as the investment is typically a long-term one, 3% over the entire investment period is something most property investors will absorb.”
- “…those who are renting could find their rents are even higher after this policy comes into effect in April, as landlords pass on their higher costs to tenants. This, therefore, would make it even harder for first-time buyers to get on the property ladder.”
“The stamp duty will be ineffective in helping first time buyers, indeed it could hinder them further. If the government is serious about helping generation rent it needs to rethink. The solution to the housing crisis is not the rate of stamp duty.”
“Planning restrictions and building more homes would be a better way to deal with the ongoing housing crisis in Britain.”
Read “Landlord Face Fresh Onslaught from the Chancellor” here
Buy to Let Clampdown won’t help Generation Rent – https://t.co/m9l0RLWCjO
— LandlordZONE (@LandlordZONE) December 7, 2015