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Stamp duty surcharge will deter Build To Rent warns property federation

The British Property Federation says George Osborne’s stamp duty surcharge will threaten the success of the Build To Rent sector, which currently has 40,000 units to let in development. 

The build to rent sector has attracted over £4 billion investment since the start of 2016 alone, says the BPF. 

The government had originally indicated that it would not apply the new three per cent stamp duty surcharge to institutional purchases, but did an about-turn in last month’s budget. In contrast, the Scottish Government has decided to exempt institutional transactions.

The BPF says the Westminster government’s change of heart on the surcharge has drawn surprise from one of President Obama’s former housing advisers, Mark Linton, the former chief of staff for the US department of housing and urban development, who said it left many observers “scratching their heads” 

Ian Fletcher, director of policy (real estate), at the British Property Federation, says: “Many institutional investors will find it difficult to fathom why something so good - adding to housing supply - is taxed so highly. Given that in many cases the tax will equate to a loss of a year’s worth on income, it is unsurprising that many investors are thinking twice about entering the sector.”

He adds: “As well as the direct financial impact, what we cannot also afford is for this to knock the sector’s confidence when there are so many units coming out of the ground and the potential for many more.”

  • Julian Bishop

    How to Kill an Industry by George Osborne.

  • Andrew McCausland

    This whole raft of policy towards the PRS shows signs of poor design by people with no experience of the industry or, more importantly, no concept of the effects of its implementation. Barring the limited uptake in gross tax income (which will no doubt be more than offset by the additional costs of social housing) for the government there are no redeeming features for any of the recent policy announcements:
    1. Encouraging more new build - no, see above.
    2. Encouraging renovation and reuse of older housing stock - no, private investors now discouraged from buying more stock.
    3. Helping people on to the housing ladder - no, bank of mum and dad not pay higher SDLT.
    4. Helping renters save deposits to buy their own home - no, higher rents by landlords to cover additional costs.
    5. Reducing the general tax burden - no.
    6. Encouraging people to take responsibility and save for retirement - no, higher costs of owning investment property.
    7. Encouraging families to look after older relatives in "granny flats" thereby releasing the state from this cost - no, higher STDT and additional Council Tax.
    All these problems were predicted but George failed to listen. I believe this budget will go down as one of the major cock up's of the parliament.
    What happened to the overarching Conservative strategic aims of encouraging entrepnourship, self reliance and a smaller state?

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