The policy is based on an assumption that the buy-to-let and second home markets are directly responsible for the challenges first-time buyers face. While there may be competition in certain hotspots – such as coastal Southern England – the reality is different in large parts of the country. By disincentivising landlords to invest, we may see fewer derelict homes being returned to the market in certain areas.
In a departure from the Autumn Statement, the consultation also implied that exemptions for large-scale investors may only apply to purchasers owning at least 15 residential properties. IMLA members were of the view that this is too high, and could severely restrain the supply of rental accommodation. Given that only 5% of landlords own five or more properties, but this 5% owns 38% of the private rental sector stock, it was felt five residential properties would be a better benchmark.
We also questioned whether this policy proposal had been properly thought through. The consultation paper sets out numerous examples to ‘explain’ the policy, but these were not always clear. For example, there is a lack of clarity if homeowning parents who take a stake in their children’s homes will trigger the levy – which would be out of touch with market realities.
IMLA also challenges the new tax’s ‘justification’ on the grounds that it would fund the affordable homes programme. This should be supported by central funding, and not dependent on revenues tied to market fluctuations.
With demand for rental accommodation set to grow irrespective of homeownership levels, it is vital that the private rental sector is allowed to expand to meet people’s needs. Ultimately, the SDLT policy is further evidence of the government’s departure from a position of tenure neutrality and it may negatively impact those it is trying to support – aspiring homeowners.
