First Brexit. Now Coronavirus. With consumer confidence at a low, the housing market faces the prospect of another moribund year – unless Boris rethinks stamp duty and stops over-taxing landlords, in a bid to ease up housing affordability and supply.
That’s the view of property professionals in the lead up to Wednesday’s budget with stamp duty reform top of the wishlist’s of many. “Boris Johnson has previously pledged to implement changes to Stamp Duty legislation by raising the threshold to £500,000. It would relieve large sections of the country from the burden of stamp duty and go a long way to bolstering consumer confidence,” says Iain McKenzie, CEO of the Guild of Property Professionals.
The mooted 3% stamp duty surcharge on Non-UK investors divides opinion, but its introduction may help ease the “chronic imbalance” between supply and demand of housing stock, says Jamie Johnson, CEO of FJP Investment, whose recent poll of 750 UK property investors found that 70% were in favour of the surcharge. “With such widespread support, the Government could go further still and also reduce the tax on first time buyers who have yet to gain a foothold on the property ladder,” he comments.
It’s expected that the Government will hold firm on its commitment to repeal Section 21, which will make it harder for landlords to evict tenants. And it’s unlikely there will be a U-turn on the phasing out of mortgage relief for landlords. But increasing regulations and taxes are the main reason for 37% of landlords saying they are looking to sell properties in 2020, according to research by Accumulate Capital.
“The Government should do more to support landlords to remain in the sector, not drive them out,” says McKenzie.
Reforming stamp duty is a complex task, however, and compromise may be the answer, thinks Sean Hooker, head of redress at the Property Redress Scheme. “I can see a tweak in so far as overseas landlords facing a penal hike. However, domestic landlords should not expect a rolling back of the past changes brought in to ‘stimulate’ the first-time buyer market.”
High numbers of landlords may be planning to sell up this year. But many are considering migrating to the short-let sector, potentially removing nearly half a million properties from the long-term PRS housing stock. David Alexander, head of the property management company Apropos by DJ Alexander, is calling for a level playing field between the long and short-term rental sectors. “It cannot be right that short term holiday letting enjoys a more favourable tax environment,” he comments. “Surely the long-term letting market, which provides permanent homes for millions of individuals, deserves comparable treatment to a market providing holiday homes for tourists?”