The chancellor Philip Hammond is being urged to reverse George Osborne’s outright assault on buy-to-let by scrapping the 3% stamp duty surcharge on second homes and buy-to-let properties in a bid to help give the housing market a much needed boost.
Osborne’s reforms, which came into play in April, have had an adverse impact on the buy-to-let sector as reflected by the sharp fall in the number of buy-to-let purchasers recorded, and now the Society of Licensed Conveyancers (SLC) wants to see Hammond take drastic steps to stimulate the buy-to-let sector, along with the wider housing market.
Simon Law, chairman of the SLC, commemted: “In spite of some trying to talk the market up, there is no doubt that transaction levels and new housingbuilding are being adversely affected by a number of factors.
“While some people point at uncertainty created by Brexit, it is the Society’s belief that Osborne’s punitive and unnecessary reforms to the taxation regime associated with private sector property investors and landlords have been the main cause.
“The reforms have also caused enormous confusion for property purchasers and their conveyancers, particularly in respect of SDLT, resulting in frequent delays and even transaction failure.”
Law believes that there is a “real and significant” opportunity for the new government under Teresa May to unlock economic growth by “simply reversing the Osborne reforms” in the Autumn statement which will be published on 23 November 2016, and this is a view shared by Eddie Goldsmith, chairman of The Conveyancing Association.
Goldsmith commented: “I think many would agree that we’ve seen rather more than a traditional, seasonal housing market drop-off over the summer – the latest figures from the Bank of England show that mortgage approvals continued to fall with their value down to £17.7bn in August from £19.2 billion in June. The impact of the 3% increase in stamp duty charges for additional properties has been sizeable and we’ve seen considerable falls in buy-to-let purchase activity although remortgaging has improved.
“The anticipated boost George Osborne’s measures were supposed to give to first-time buyers appears not to have materialised. The latest figures from the CML show that landlord borrowing was 21% down year-on-year in July, while first-time buyers’ borrowing was down 19% month-on-month, and 4% year-on-year – hardly the renaissance in first-time buyer activity we were led to believe would result from buy-to-let activity being forced downwards.
“When you add in the uncertainty wrought by the result of the EU referendum, the impact across the entire housing market is sizeable. Transaction levels have dropped over the past few months, the market is subdued to say the least and this clearly impacts on the conveyancing sector.”
Goldsmith anticipates that the housing market will improve slightly throughout the Autumn, but believes that the industry would “undoubtedly benefit” from a reappraisal of those measures by the new chancellor in his first Autumn Statement.
He continued: “It may be too much to hope that the 3% extra charge on additional property stamp duty will be abolished, but such a move – as well as a u-turn on next year’s mortgage interest tax relief changes – would be most welcome, sending a clear message that the private rental sector (and those active within it) are not the enemy, whilst breathing much-needed new life into the UK housing market.”