So today’s the day. Many will no doubt be wishing it was an April Fools’ joke, but the additional 3% stamp duty land tax on second homes and buy-to-let properties that comes into force today is anything but for investors - especially now news has emerged that the Bank of England is pondering measures to “curtail inappropriate lending” and potentially reduce the amount lent to would-be buyers.
In the last few days, solicitors have reportedly been swamped by buyers trying to complete house purchases ahead of the SDLT hike on ‘additional property’. There has only been a fortnight or so between George Osborne’s confirmation in the Budget about how the surcharge would work and its introduction, so the last-minute scramble is no surprise. What is a surprise is that on top of this, buy-to-let landlords now face the prospect of further, arguably more damaging restrictions. The question is: will the anticipated slump in activity materialise - and will it actually achieve the effect desired by government?
While the stamp duty hike on its own is unlikely to deter serious buyers, in conjunction with the other controls being proposed, it could well dampen the market. Residential Land’s Bruce Ritchie warns that artificially intervening in buy-to-let will steer investment away from residential new-build and therefore reduce the prospect of increased supply.
“There have now been 23 changes in residential taxes since Osborne’s appointment and clearly he has no intention of helping increase supply,” he adds. “The government has broken its promise to help build more homes by valuing this area of the manifesto less than the deficit reduction.”
What is so tragic is that the drive to turn the ‘P’ in PRS from ‘private’ to ‘professional’ is entirely laudable. Cooling the market is no bad thing either necessarily. Moreover, it should on paper help first-time buyers get a foot on the property ladder. Yet if anything, the prospect of ‘generation rent’ joining the ranks of homeowners is receding ever further in the rear-view mirror. If there’s no supply, there’s nothing to buy, and what is available is way out of reach of most first-time buyers, even if they do have help from the bank of mum and dad. Worse, they could now well find themselves paying more rent as landlords hit by the new measures pass on the additional costs. That surely has to be the very opposite of the intended consequence.
The fact is that supply of all tenures is required to address the housing crisis, particularly in the capital. Old Oak Common could be part of the solution, promising as it does 24,000 new homes if the vision is fully realised, the operative word being ‘if’. As the scheme demonstrates, the complexity of large public sector projects is invariably problematic, not least because they tend to require a number of public sector bodies to work together. The answer increasingly is to work in joint venture with the private sector.
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