The managing director of the mortgages division of deVere Group, one of the world’s largest independent financial advisory organisations, says George Osborne’s three per cent stamp duty surcharge on buy to let properties is nothing more than a “political stunt.”
Mike Coady says the surcharge will be ineffective in its purported aims of raising cash to help first-time buyers and paying for more affordable housing, for three reasons.
“First, the revenue raised – £1bn by 2021 – is nominal given the scale and seriousness of the affordable housing crisis. To many it seems this is something of a political stunt.The government is wanting to be seen to be acting on this emotive and topical issue and is doing so by appealing to the politics of envy with buy to let landlords and second homeowner the targets” he says.
The second reason he gives is that it may trigger something of a ‘rush to buy’ phenomenon between now and April by those wanting to purchase a buy to let property racing to avoid paying the extra levy. “This will, of course, push up prices in the short-term” warns Coady.
Ironically, he says, the overseas investors will not be deterred in great numbers because “most will still regard investing in property in the UK, especially in areas like London, the South East and Manchester, as an attractive and safe investment opportunity”.
Thirdly, he says, those who are renting could find their rents are even higher after this policy comes into effect in April as landlords pass on their higher costs to tenants.
“This, therefore, would make it even harder for first-time buyers to get on the property ladder. The stamp duty will be ineffective in helping first time buyers, indeed it could hinder them further” he insists saying the solution to the ‘Generation Rent’ problem is not higher stamp duty but fewer planning restrictions and more homes.