Stamp duty change would give the PRS momentum

Andrew Turner

August 7, 2019

Andrew Turner (pictured) is chief executive at Commercial Trust Limited

The arrival of Boris Johnson as the new incumbent at 10 Downing Street, has provided the stimulus for many in the PRS to call for the end of Stamp Duty Land Tax.

The demand has come from many quarters, with UK Finance data showing a clear slowdown in the housing market and in particular, buy-to-let borrowing, since the government introduced its 3% stamp duty levy on second homes in April 2016.

Johnson has been vocal in his concerns about the detrimental impact of stamp duty on the housing market, raising hopes within the industry. But with heightened powers now, how far will he go?

The latest English Housing Survey has again underlined just how much reliance there is on the Private Rental Sector and the need to incentivise landlords to remain in buy-to-let.

The abolition of the 3% surcharge, or its limitation, would be huge encouragement to landlords to buy more properties.

There would then be the potential for increased Treasury revenues. If more properties were bought within the PRS, extra taxes would be generated, by the loss of mortgage interest tax relief.

It would help to increase available rental stock, at a time of heightened tenant demand. More available rental properties would put less upward pressure on rents, which would benefit tenants.

More rental properties would mean more properties to manage for letting agencies, still reeling from the financial impact of recent legislative change.

In London and the South East, where buy-to-let investment has slowed markedly, prospective landlords could see thousands of pounds wiped off the cost of purchasing property. In short, the abolition of stamp duty could re-invigorate a part-stagnant local market.

Undoubtedly the new Prime Minister will be focussing much of his time on trying to resolve Brexit satisfactorily over the coming weeks.

The big question is how much attention will he pay to housing and, how soon can we expect to see change?

Whether Brexit results in a deal or no deal, a commitment to abolishing or reducing stamp duty would provide a much-needed tonic for the PRS.

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