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Editor’s note: Stamp duty plan full of holes

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It has been two months since the Chancellor announced the incoming 3 percentage point surcharge on buy-to-let or second properties and yet it continues to dominate debate in the market, which reveals the level of concern that surrounds the proposals.

The Government’s intention is clearly to free up housing stock for the owner-occupied sector but, as the CML argues, it is not certain that the measures imposed will achieve this. Moreover, why should it come at the expense of the private rented sector? As the trade body says: “If the surcharge proposal is designed to promote homeownership, we think there should be better evidence as to why this requires a reversal of growth in the private rented sector.”

It could transpire that landlords retain their portfolios but hike rents to counteract the fact that buy-to-let will be less profitable. If the Government’s policy is to increase homeownership then this is a baffling measure as it would likely mean renters have less money to save for a deposit.

The proposals are in the consultation phase at the moment but there are unlikely to be many changes to the proposed framework.

While it is futile to call for a policy reversal, there are measures the Government could implement to reduce the likelihood of unfavourable and unintended consequences.

As things stand, some borrowers may get caught by the new rates when buying their main residence if there is an overlap between selling their home and buying a new one. The CML suggests this could be avoided by allowing borrowers to defer payment of stamp duty for 18 months, which it says would be “fairer and more efficient”.

A sensible solution, but it goes to show how hastily this policy idea has been cobbled together. It also suggests that the Government does not really understand what effect this will have on other parts of the market.

The holes in the policy are obvious but, worst of all, the Government has given the industry very little time – just a month – to digest the details and offer amendments or alternatives. If this is going to be its approach to all housing issues, we are in for a very bumpy ride.

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  • Steven Balmer 3rd February 2016 at 2:50 pm

    Could this be our elitist government simply using smoke screens to hide the fact that they are massively reducing tax for the more wealthy, from 12% to 3% for property bought over £750k. Also, does an oligarch or Chinese person buying a property in the UK also have to pay? They are part of the problem but it seems to be OK as long as it benefits the London coffers. How easy it is to check if a foreign buyer has any other property, commercial or residential, anywhere in the world? Very open to abuse and how is it possible to suggest this change creates a fairer tax system assuring those most able pay that little bit more? It is a Tory joke gone wrong and the fact it is to better serve Londoners with Help to Buy London is also insulting as a Scots person. A stately home in the Highlands costs less than a one bed flat in London so why should we prop up this false economy when no one outside the M25 will see any benefit back? At the least it is only likely to increase a need for more London Living Allowance to deal with ever inflated house prices. Government should stay the hell out of this so the market can fix itself and common sense can prevail. U turn Osborne, it will not be your first!

  • Peter Pownall 3rd February 2016 at 8:06 am

    As far as CML is concerns they burden conveyancers enough with Part 1 and Part 2 Handbook requirements. Are they seriously suggesting that conveyancers keep their files open for 18 months where buyers could be caught by the proposed SDLT changes?