View more on these topics

Lenders urge Govt to rethink B2L stamp duty hike

Money-Notes-Currency-GBP-700.jpg

Lenders have united to slam HM Treasury’s planned 3 per cent surcharge on stamp duty land tax for second properties as rushed and flawed.

The Government wants £60m of the tax to help communities in England where the impact of second homes is a problem and will use some of the cash to build affordable housing.

The Council of Mortgage Lenders and the Intermediary Mortgage Lenders Association are urging the Government to rethink the higher tax rate, saying that the plans would backfire on the housing market as a whole.

The CML says there “is a risk of overkill in dampening investor sentiment to the extent that the flow of available private rented property could be disrupted” and that the number of homeowners would not necessarily increase.

It also suggests landlords could put up rents because of the proposals.

CML director general Paul Smee says: “Our longstanding view is that stamp duty is a blunt policy lever. Given the complexity of the proposals, we also suspect that in practical terms the surcharge could cause more problems than it solves.

“We urge the government at least to move away from a position where people will have to pay and then potentially claim back to one where payment is deferred, and only triggered if the buyer genuinely falls into the intended target category.

“
If the surcharge proposal is designed to promote home ownership, we think that there should be better evidence as to why this requires a reversal of growth in the private rented sector.”

Intermediary Mortgage Lenders’ Association executive director Peter Williams says the proposal is a “poorly-constructed intervention in the housing market”.

Williams slammed the short time given to respond to the consultation, which opened on 28 December and closed on 1 February.

He says: “They have no view about how this tax will impact on the market as a whole, let alone the buy-to-let market.”

Williams says that affordable housing should be funded by general taxation and not hypothecation.

He says: “What this comes down to is a small additional charge on transactions, which will eventually be swallowed, but it puts extra pressure on rents. It doesn’t seem at all sensible.”

The proposed tax surcharge would apply from 1 April 2016.

The proposed tax rise is one part of the Government’s Five Point Plan to help low-cost home ownership for first-time buyers announced in its Spending Review and Autumn Statement 2015.

Other points of the plan are to build 400,000 affordable homes by 2021, to extend the Right to Buy to housing association tenants, to speed up housebuilding and to introduce London Help to Buy.

Recommended

Die-to-let: Will the Chancellor’s B2L policies have unintended consequences?

The Chancellor’s housing policy is one-dimensional, antagonistic and likely to have unintended consequences for the buy-to-let sector, say experts There is arguably no part of the market more in the spotlight than buy-to-let. The sector’s rapid growth – from a low of £8.6bn in 2009 to £27.4bn in 2014 – caused concern among policymakers, leading […]

Buy-to-let Watch: Market is already reacting to B2L tax changes

Lenders know the Chancellor’s measures will have an impact on the sector and some feel the need to react to that now Although the Government’s proposed cuts to landlord tax relief do not take effect until 2017, the market is already reacting to them. TSB is the latest lender to increase its rental cover calculation […]

House-Keys-Mortgage-Estate-Agent-700.jpg

Rent rises counteracting increasingly tougher B2L stress testing

Landlords’ ability to take out larger loans is not being harmed by increasingly tougher stress testing criteria due to rising rents, according to research from Buy to Let Club. Lenders’ norm for many years has been 125 per cent at 5 per cent, but this is increasing, according to Buy to Let Club managing director […]

Bob Young Fleet 2014

Bob Young: Small landlords will bear brunt of B2L tax changes

Consultation on buy-to-let stamp duty increases reveals only ‘largescale’ investors will benefit from exemptions The period between Christmas and New Year might not seem like the best time to issue a consultation paper but this is exactly when HM Treasury decided to publish its much-anticipated one on the higher rates of stamp duty for additional […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Brian Hall 29th January 2016 at 3:36 pm

    Do the lenders have a ‘well-constructed plan’ for popping the buy-to-let bubble and stopping a massive rise in housing benefit demand as generation rent retires? No? Then they should butt out and let the government get on with it. Williams should know not to threaten rising rents. Better to act now than in a few years when the private rental sector is even bigger. The CML and IMLA are clearly detached from the realities of the market and its impact on the taxpayer and the economy.