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Stamp duty campaign gathers pace

Published on Thursday, 15 December 2016

Anger over Chancellor Philip Hammond’s decision to continue with his predecessor George Osborne’s 3% stamp duty levy for second homes and buy-to-lets isn’t going away. Property Week has launched its ‘Call Off Duty’ campaign help stamp it out urging the government to reverse its policy.


The stamp duty levy was conspicuous by its absence when Hammond made his Autumn Statement in late November ignoring the issue completely.


Now the property sector is fighting back with a campaign to persuade Hammond to back down in March when he is due to make his next round of budget announcements.


The Call Off Duty campaign has already received backing from top names in the sector including Berkeley, L&G, Mount Anvil and McCarthy & Stone.


They are concerned the government’s punitive measures will see landlords leave the sector despite the need for rental property increasing as more and more people find themselves unable to afford to buy their own property as well as helping to meet the needs of the housing shortage. Alternatively, landlords may pass on the additional costs to tenants in the form of rent rises.


As well as the 3% stamp duty for second homes and buy-to-lets, restrictions on the payment of mortgage interest relief comes into force in April curtailing the off-setting of mortgage interest against tax to the basic rate of income tax. The planned government review on how incorporated businesses are taxed has also been raised as a potential issue since many landlords have revamped their business model in this way.


Meanwhile house builder Berkeley Group has already blamed the stamp duty levy and uncertainty over Brexit for slow sales at its new developments stamp duty rise . The company reported a 20% drop in reservations and referred to ‘the extraordinary attack on buy-to-let landlords’ by the government. However, despite fewer reservations, the developer reported a 33.9% rise in profits in the half-year to 31 October 2016 as a result of higher-priced properties sold. Whilst few homes were sold in that time, 2,076 in total, they did so at a higher rate equating to at an average price of £655,000.


The campaign also draws into focus the higher stamp duty for homes at the upper end of the market valued from £925,000.01 to £1.5 million which are subject to 10% whilst those at £1.5 million plus fall into the 12% category. The industry argues stagnation at the top of the market is filtering down and people are just staying put.


Tempting though it is to dismiss the call for an easing of stamp duty at the premium end of the market as simply the bleating of the rich, in fact, it has implications for the market as a whole. For example, if developers cannot sell their top priced houses, they simply won’t build them which means the lower priced homes are also shelved.


Perhaps more acutely, the receipts from the revised stamp duty measures are not boosting the government coffers in quite the way as it was anticipated. The day after the Autumn Statement, the Office of Budget Responsibility (OBR) revised its forecast of tax raised from stamp duty announcing receipts from the top end of the market and particularly in London had been weaker than expected. In fact, the OBR anticipates a reduction of £9.5 billion in stamp duty receipts over the next five years than was forecast at the time of Osborne’s Budget in March 2015.


Property Week is currently building its case that ‘SDLT is an absurd and dangerous tax that is stifling the housing industry’ and is asking for industry input call off duty and plans to put its evidence to government in the hope of reversing some of its policies affecting the sector.


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