The UK’s Government’s decision to raise the stamp duty levied on buy-to-let or second homes, as stated in the November Spending Review, may have investors rushing to complete a property purchase before the change kicks in, but by and large the UK property industry has reacted negatively to the announcement.
Here are snippets from a selection of leading voices in the London property scene, highlighting why the rise could be bad for London’s property market.
Lucy Morton, Head of Residential Agency at WA Ellis and JLL: “It is very disappointing that the Government is discouraging buy-to-let investors by increasing stamp duty land tax (SDLT) on such purchases… The investment community, particularly the individual buy-to-let landlords, will not trust this policy and it could have a negative impact on the demand for off-plan purchases and new homes.”
Andrew Langton, Chairman at Aylesford International:
“In my view this will seriously reverberate on the price of second homes and inevitably lower the prices achieved on property within these sectors. In the longer term such harsh measures could come back to bite the government, as the volume of property transactions will surely slow down resulting in reduced revenue for the Treasury.”
Tony Wright, partner and national property consultant at Carter Jonas:
“Less residential investment activity is traditionally seen in the winter months. However, this new legislation could create a surge in demand, as landlords look to beat its implementation date. Conversely, once it comes into effect, this, coupled with other recent legislative changes on the reduction of tax relief on buy-to-let mortgages, could deter all but the most determined non-professional buy-to-let investors from expanding their portfolios.”
Marc von Grundherr at Benham & Reeves Residential Lettings:
“For years, buy-to-let has been touted as an alternative to pensions. Today’s move will force many to leave the sector altogether, increasing their dependence on the state and diminishing the overall number of properties available to tenants. This, in turn, will invariably lead to increased rents and falling property standards. The Chancellor has unilaterally decided that buy-to-let landlords are responsible for pushing house prices beyond the reach of first time buyers. This is ridiculous. A lack of homebuilding has pushed up prices and we also have to look at first-time buyers themselves. We’re also seeing a shift in expectations from the Millennial Generation. They’re less willing to go into ungentrified areas, renovate properties themselves or even save for years for a deposit. I couldn’t afford to buy in Chelsea as a first time buyer, either. Don’t blame buy-to-let landlords who are simply trying to supplement their derisory pensions.”