There has been a lot of noise recently surrounding the 3% stamp duty surcharge on the purchase of second homes that came in six months ago and industry leaders are calling on the government to now reverse their decision. At the time, property industry analysts predicted that it would be damaging to the London market and build-to-rent sectors and early figures bear this out.
Six months on from the announcement of the surcharge, the prime central London property market is stalling and quite a few build-to-rent schemes are proving to be financially unviable.
It was hoped by the then chancellor George Osbourne that the levy would stop landlords buying up all the property and enabling younger first time buyers to enter the market. However, the negative impacts of the rise have hit transaction rates in general, hampering the government’s desire to build one million new homes by 2020.
Central London has been hit hardest by the hike in stamp duty charges and it is estimated that 60% of London buyers are not prepared to pay the extra levy.
The build-to-rent sector has also suffered, making several projects devoid of profit and not worth pursuing.
Consequently, the build-to-rent industry is lobbying the government hard to remove the surcharge, even if it’s just for the BTR sector. And it seems that this message may be getting across because government sources have revealed that revisiting stamp duty is making its way on to the agenda. Both Sir Edward Lister, chairman of the Homes and Communities Agency and Gavin Barwell, the new housing and planning minister, have voiced their concerns on the impact that the stamp duty surcharge is making and there is now an expectancy that something needs to be done about it.
Disappointingly, nothing came out of the Conservative Party conference last week with regards to stamp duty, but it’s certainly an issue that isn’t going away any time soon and there is increasing pressure on the government to address this problem. It will be interesting to see how this one develops…