“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.”
*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
– Ends –
For further information please contact:
Maham Uzair / Will Muir, Instinctif Partners
Tel: 0207 427 1422 / 29 / firstname.lastname@example.org
Notes to Editors
The Intermediary Mortgage Lenders Association (IMLA) is the trade association that represents mortgage lenders who lend to UK consumers and businesses via the broker channel. Its membership unites 39 banks, building societies and specialist lenders, including 17 of the top 20 UK mortgage lenders responsible for more than £200 billion of annual lending.
IMLA provides a unique, democratic forum where intermediary lenders can work together with industry, regulators and government on initiatives to support a stable and inclusive mortgage market. Originally founded in 1988, IMLA has close working relationships with key stakeholders including the Association of Mortgage Intermediaries (AMI), UK Finance and the Financial Conduct Authority (FCA).