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.”