The government should aim to boost the supply of much-needed housing stock in the private rented sector by scrapping the 3% stamp duty surcharge for buy-to-let landlords acquiring additional properties, according to the National Residential Landlords Association (NRLA).
The organisation has once again argued that abolishing the stamp duty surcharge would boost housing market activity by encouraging investors to return to the market and invest in properties and that would in turn help meet the rising demand for rental homes and drive up transaction levels.
Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits in recent, which partly explains why so many people have exited the BTL market and thus reduced the supply of private rented stock.
The government’s draconian tax changes have not just pushed a number of BTL landlords out of the PRS, but have also left prospective tenants in some parts of the country with little alternative but to bid against each other, pushing rents up in the process, as a result of falling housing supply.
Given that investors invest in a wide range of properties, Ben Beadle, chief executive of the NRLA, argues that supporting activity in this area of the market would add to the net supply of housing.
According to Capital Economics, removing the stamp duty surcharge would see almost 900,000 new private rented homes made available across the UK over the next ten years.
As a result of increases in income and corporation tax receipts, the modelling suggests this would lead to a £10 billion boost to Treasury revenue over the same period.
Beadle said: “Ministers have been repeatedly warned of the damage that would be caused if they continued to attack the private rented sector.
“The supply crisis is completely counterproductive to the government’s mission to turn renters into homeowners. By suppressing supply whilst demand increases, with rents going up as a result, they continue to make it harder for tenants to save for a home of their own.
“The chancellor needs to wake up to a crisis of the government’s own making, scrap the tax on new homes to rent and review other measures which add to a landlord’s costs.”
Does the country/ wider society want more properties being removed long term from home ownership?
I can see why investors find the surcharge irkssome but the 3% additional outlay is recouped in capital growth on the property purchased within 6 months of completion. It might not be available to fund another deposit but in the grand scheme of things it’s not the sort of thing that should deter investment.
Taking 900,000 transactions out of the sales market cannot be a good thing either; at current values that’s at least £3.24 billion lost commissions to agents, 900,000 stamp duties and 900,000 that won’t be available for home ownership.
I can see why NRLA would lobby this but cannot see good reason why, whilst its being considered, the tax on portfolio purchases shouldn’t be a lot higher
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there seems to be a common misunderstanding that if a Landlord leaves the market, it makes space for a first time buyer, so therefore it’s landlords vs first time buyers. This “feels” very intuitive and most people don’t investigate their thinking beyond their “feelings”.
it’s true that a Landlord can take a house away from a first time buyer, just like a women entering the workforce can take a job away from a man, but the thing to remember is that the size of the pie is not fixed (it’s not a zero sum game).
Landlords entering the market more easily encourage developers to turn commercial buildings into residential flats, to convert large houses into flats and to build to rent, encouraging landlords to buy these newly built properties to house people. Adding a tax makes these things more expensive and so reduces the size of the market making everyone worse off, including the tenants and the first time buyers. Just like how men are worse off in countries where women haven’t been allowed to enter the workforce to “protect men’s jobs”. Not every idea that “feels” intuitively correct is going to be correct or deliver the results you think it will.
If stamp duty was reduced, then I personally think that property prices would increase by something like 80% of that amount, causing more investment into the sector, to build and convert more homes to appeal to those investor buyers.
Ultimately landlords would not be much better off, but tenants would have more choice, driving down rents and forcing up standards as landlords have to compete to appeal to tenants. A tax on landlords is a tax on tenants, so a tax reduction on landlords benefits tenants. Some of whom might be saving up for their own house.
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Scrapping the stamp duty for landlords is NOT the answer too solving the housing crisis!! The Government need to come up with better ideas to give 1st time buyers and people that want to down size and move the chance to do so !! Investors would say by giving more properties to them this will help the supply and demand therefore pushing rents down!! RUBBISH !! This will just make it more difficult for those who want to OWN and not LOAN!! Making the investors even more wealthy!! Rents never come down! Bring in more help to buy and increase the 990 yr rule for sharedownership ! Sort out the cladding issues ! Give us the little people the right to OWN a bit of our own Castle !!
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Actually rents do come down and particularly so when there is over supply. Not sure why you think FTBs are having it so tough. Do a google on the number of them that buy each year – it is easily the biggest group of buyers. You might like to start your research at statista who provide some excellent stats and graphics, which I’m afraid, blow your claims out of the water. You might not be able to buy a house (for whatever reasons) but plenty of people are! Sorry old chum.
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I don’t want to have an argument about it but FTBs are at a massive disadvantage to investors; institutional, professional and amateur hovering up multiple homes each month. There is currently 1 property suitable for a FTB where I am. It is £85,000 more than it should be and that’s why it’s available
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If you don’t want an argument then why have you started one?
Whether or not FTBs are at a disadvantage compared to investors is completely irrelevant. Many many thousands of landlords have sold up in the last few years but look what’s happened to property prices. That goes to show how little impact landlords have on prices, so your assertion is incorrect.
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I haven’t started one. Where are you getting the numbers from to show how many landlords have left PRS; the many thousands you’ve quoted?
If FTB’s have been beaten to purchase by agents selling to other landlords properties sold have not benefited home owners they’ve become rentals for different landlords.
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Stamp duty should be increased! Not abolished for investors!!
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So well argued.
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Thank you very much, but we don’t need more people fighting to buy property. Demand already far outweighs supply, hence the increasing house prices. By dropping the 3% SDLT surcharge and making property investment more attractive to would-be landlords, all that would happen is house prices continue to increase, but now at a faster rate; mortgage repayments are therefore higher; rents increase to reflect this.
The result: FTBs are once again pushed out of the market because agents prefer selling to LLs (because there’s the chance we get the property back to manage its rental). Then we get government stepping in once again to save the day [*cough*] with some newfangled scheme to ‘help’ FTBs.
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Not going to happen in Wales, out right stop the English from buying second homes in Wales. It didn’t, they can afford the surcharge but they put the knife into PRS which is diminishing, some from principle for being told not wanted in Wales, some from hate for taxes in any event and some because unlike the wealthy parts of the UK property prices are lower but the tax is still high V rent yield in many areas added into the equation of all the other landlord bashing = can I be bothered to get into renting! (many are leaving PRS).
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FTB’s or PRS housing the fact is the shortage of housing that is the problem so I do not really accept much of the comment being passed above. Housing is housing whether rented or owned and puts roof over heads and that is what is in short supply. I stopped investing in hiousing a few years ago. NOT because of 3% extra “pick pocket” tax which is discrimatory but due to the CONSTANT LANDLORD BASHING and desire to take away the Landlords rights to control his/her own property investment. The never ending extra regulations often not of value, such as licensing giving a chance for councils to pick a few more pockets, particularly whole borough licening such as Croydon (who have been shown not to maintain their own portfolio properly!) I am talking removal of the rights of an investor to control his/her investments SUCH AS REMOVAL OF S21. Shelter, Crisis, Generation Rant, Acorn ALL discriminate against Landlords and pretty much “gob off” without actually providing much housing themselves or none in the case of Shelter; funded by Government and people like B&Q and more concerning the Nationwide Building Society spending their members money in making donations to Shelter rather than re-invest profits into the investors accounts AS THEY SHOULD. The idiot Conservative Party just can’t help buying the votes of these people and tenants as there are more tenants than landlords. Now they, the conservatives, want to bring back right to buy social housing to try and BUY MORE VOTES as first master minded by Thatcher. Council’s sold off their housing and reduced the supply of social housing. Now guess what? its private sector landlords that are demonised by all these orgainsations that have generated a lot of the problems. Like the appalling event of Grenfell it was the Government that produced the building regulations (which included fire protection standards) yet again they demonise everyone but themselves. If I have made wrong assumptions I stand to be corrected.
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