With the new additional property Stamp Duty regime now upon us, the government’s apparent desire to balance the aspirations of first-time buyers with the need for a strong private rental sector (PRS) feels increasingly strained. The irony is that in setting aside the principle of tenure neutrality, the Chancellor has increased the risk of failing to improve the lot of would-be first-time buyers.
In its response to the Treasury’s consultation on higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties, IMLA expressed concern that the proposed exemption for landlords owning at least 15 properties was set too high, and could severely restrain the future supply of rental accommodation. The decision to extend the levy to all landlords, at just a few weeks’ notice, is likely to further undermine the private rental sector’s ability to deliver quality and affordable accommodation.
This initiative is the latest in a series of efforts to limit the buy-to-let sector, which has included ending tax relief for landlords and proposed new underwriting standards for lenders. Policymakers are at serious risk of sleepwalking into a situation in which they undermine the private rental sector (PRS) in their quest to be seen as champions of homeownership. The PRS’s sensitivity to change was highlighted by a National Landlords Association survey, which suggested that 43% of landlords plan to reduce their portfolio or not add any further properties.
Unless matched by a commensurate increase of first-time buyers entering the market, the risk is that landlords turning their backs on the PRS will have a detrimental impact on the state of the country’s housing market. Not only could these would-be buyer tenants face widespread rent rises and declines in standards but their capacity to save for a deposit would be undermined. It is difficult to see how this situation would benefit anybody, let alone aspiring first-time buyers.