Transaction levels could be reduced to ‘rubble’, lawyers warn new Chancellor

Conveyancers are calling on Chancellor Philip Hammond to reverse his predecessor’s tax attacks on the private rented sector.

The Society of Licensed Conveyancers said that George Osborne’s measures “have had a significant impact on property investment with a consequent impact on the whole property sector”.

Simon Law, chairman of the society, said: “In spite of some trying to talk the market up, there is no doubt that transaction levels and new housing building are being adversely affected by a number of factors.

“While some people point at uncertainty created by Brexit, it is our 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 failures.

‘There is a real and significant opportunity for the new Government under Teresa May to unlock economic growth very quickly by simply reversing the Osborne reforms in the Autumn statement. There is no doubt that a robust property sector can help allay any fears of an economic downturn if swift action is taken.”

The Conveyancing Association backed the call, with chairman Eddie Goldsmith saying: “I think many would agree that we’ve seen rather more than a traditional, seasonal housing market drop-off over the summer.

“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.

“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, and the market is subdued to say the least.

“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 is not the enemy.

“This represents a pivotal moment for the UK housing market because the anti-landlord and investor policies that have been introduced, plus the result of the EU referendum, has led to something of a perfect storm which (if allowed to continue) could reduce transaction levels to rubble for many months to come.”


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