The Spending Review was predicted to announce lots of measures to boost the housing supply and the Chancellor did not disappoint…. unless you’re a landlord of residential property.
The Chancellor unveiled a five point plan to increase the number of homes in the UK, which included planning reforms, extending right to buy and the help to buy schemes and discounted starter homes. The first four proposals, along with releases of government land and an extension to measures designed to help the small builder, will be music to the developers’ ears.
However, the sting in the tail was the fifth point which attempts to dissuade buy to let investors from expanding their portfolios by introducing an increased Stamp Duty Land Tax rate for those who are buying investment properties or second homes. For purchases after 1 April 2016, a 3% additional charge will apply at every band on purchases over £40,000. There will be a consultation on exemptions for corporates or funds with over 15 properties, but it does not appear this exemption would also extend to individuals.
Landlords were further targeted by an acceleration in the payment of Capital Gains Tax (CGT) on the disposals of residential property, such that from April 2019, CGT will be payable 30 days after completion. With the OBR forecasting house prices to grow at an average of 5% a year, down from growth of 9.9% in 2014 and the housing benefit cap biting, landlords will no doubt be reviewing their portfolios and their investment strategies.
With various property experts predicting short term bubbles as investors rush to complete deals before April, it is also possible that the long term impact may be for rents to increase or the standards of rental properties to decline. To me, it seems clear that the major increase in housing supply needs to come from new homes being built, rather than the Chancellor’s continued battering of individual and smaller landlords.
