IMLA comments on the 2016 Budget
Peter Williams, Executive Director of IMLA, comments on today’s Budget announcement:
“Moves to streamline the planning system and unlock more land for development are all well and good, but fall fundamentally short of the far-sighted reform needed to address the UK’s housing imbalance. Today’s Budget leaves the distinct impression that government is limiting its ambitions to managing demand, with previous policies having so far failed to reverse the supply shortage which is staring everyone in the face.
“Removing the slab system for stamp duty on commercial properties is a welcome move, but the same cannot be said of the fact that professional landlords will now be liable for the 3% stamp duty hike on new residential purchases at very little notice, with changes taking effect in a matter of weeks. The impact on a typical buy-to-let investment may be modest* but this U-turn seems to undermine the Government’s apparent ambition to ‘professionalise’ ownership within the private rental sector and will do little to inspire confidence in the direction of future policy.
“IMLA’s consultation response 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. Given that only 5% of landlords own five or more properties, but this 5% own 38% of the private rental sector stock, it was felt five residential properties would be a better benchmark. With all purchases now liable, the chances of a supply squeeze are even greater.
“With landlords also passed over for cuts to capital gains tax, the danger of this one-eyed focus on supporting owner-occupation is that, sooner or later, constant tinkering will overstep the mark and fundamentally weaken the supply and condition of properties in the private rental sector, which has so far proved the only part of the housing market capable of responding in any measure to the demands of our growing population.
“It will take time for landlords to adjust to the full impact of these changes and reductions of mortgage tax relief. In the meantime, the private rental sector should be handled with care by policymakers before any further change is enacted.”
For further information please contact:
Maham Uzair / Will Muir, Instinctif Partners
Tel: 0207 427 1422 / 29 / email@example.com
NOTES TO EDITORS:
* IMLA’s analysis suggests that, once averaged over the life of a typical buy-to-let investment (which the Association of Residential Letting Agent’s landlord survey estimates to be 20 years) the 3% stamp duty surcharge costs a modest 0.15% a year
The Intermediary Mortgage Lenders Association (IMLA) is the specialist trade body representing the interests of lenders who market their products primarily through brokers, rather than direct or through a branch network. IMLA provides a unique opportunity for senior industry professionals to meet on a regular basis to discuss key current initiatives and contribute actively through IMLA and other forums, such as the Council of Mortgage Lenders.
IMLA was formed in 1988 as the Association of Mortgage Lenders and was instrumental in the creation of the CML. It changed its name to IMLA in 1995. Subsequently IMLA helped bring the Association of Mortgage Intermediaries (AMI) into being and was instrumental in bringing the mortgage advisers qualification CeMAP to fruition. More information can be viewed at the IMLA website