SDLT figures: Stamping down on the Buy to Let boom

SDLT figures: Stamping down on Buy to Let boom

Back in the heady days before the Brexit referendum, when Britain’s economy looked – to use Theresa May’s much-parodied phrase – “safe and stable”, the Government announced a new measure which seemed like a vote-winner on the face of it.

The then Financial Secretary to the Treasury, David Gauke, set out an interventionist policy to stimulate the housing market.

His stated intention was to support those individuals looking to take their first steps on the housing ladder. However, as is so often the case, someone loses out if another group is to prosper.

One particular bone of contention in Mr Gauke’s announcement was the introduction in April 2016 of an additional three per cent of Stamp Duty Land Tax (SDLT) for people wishing to buy additional residential properties.

The premise was that if men and women were discouraged from joining the ‘buy-to-let’ boom, there would be more properties available for those looking for their first home, rather than adding to landlords’ portfolios.

Of course, not everyone wanting a second house has plans to generate rental income. For some, it might be a holiday home or simply an alternative form of savings alongside whatever pension or investments they may already have.

Towards the end of last year, there was the first suggestion that the measure had begun to bite with news that mortgages were being redeemed as ‘buy-to-let’ homes were sold off because they were no longer as attractive to purchase.

Now, there is fresh and very much more official evidence, courtesy of HMRC. It has published new figures showing that the overall number of residential property transactions liable for SDLT in the last three months of 2017 was down by only one per cent on the same period 12 months previously.

However, the proportion of such deals involving homes worth less than £250,000 – arguably the chosen price bracket for many landlords – had fallen by nine per cent during the same period of time.

For anyone looking to pick up a property of that kind of value, the prospect of coughing up an extra three per cent on top of whatever they might already be owing according to the existing tiered SDLT rates now represents quite a big transaction cost.

It would appear, then, that the Government’s 2016 objectives are, in part, being achieved. That supplementary three per cent levy seems to be acting as something of a deterrent.

I would suggest, though, that one of Mr Gauke’s successors in the Treasury hot seats – Chancellor Philip Hammond – doesn’t think the changes were enough of a stimulus, judging by his decision in November’s autumn Budget to grant an SDLT exemption to first-time buyers of homes worth up to half a million pounds.

Even allowing for the complications facing those contemplating the extra SDLT surcharge and its direct impact on the housing market, the detail squirreled away at the very bottom of the HMRC’s newest release shows that one thing is clear: Stamp Duty receipts are booming.

In the last quarter of the calendar year 2010, residential and non-residential SDLT income amounted to just over £1 billion. Turn the clock forward to the same period last year and the provisional combined figure had risen by more than 150 per cent (£2.542 billion).

Whilst people now grapple with trying to secure a first home or dispense with plans for a second (or third or fourth!) property, it seems that the Treasury profits regardless…something which various cynics might regard as the one great invariable of this whole arrangement.

 

If you have any queries surrounding SDLT, or property taxes in general, then please get in touch.

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By | 2018-02-06T11:13:19+00:00 6 February 2018|Andy Wood, blog, capital gains tax, HMRC, personal tax, property tax, tax planning, Tax policy|

About the Author:

Founder & Technical Director, Andy is a practical, creative tax adviser with a very broad tax knowledge. He is regularly quoted in the media as an expert on topical tax issues.

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