Extra Stamp Duty for non-residents likely to slow housebuilding

by Property 118

14:48 PM, 3rd October 2018
About 2 months ago

Extra Stamp Duty for non-residents likely to slow housebuilding

Make Text Bigger
Extra Stamp Duty for non-residents likely to slow housebuilding

Extra stamp duty is likely to result in a reduction in transactions and the slowing of housebuilding. With new housing starts across London falling from 33,722 in 2015 to 27,259 last year, a report in today’s (3 October 2018) Financial Times, reveals that proposed plans by the government to raise Stamp Duty Land Tax (SDLT) for non-residents and overseas companies investing in the capital, has been met with criticism from property developers.

Commenting on the report, Stacy Eden, Head of Property at national audit, tax, advisory and risk firm, Crowe, said:

“In our 2018 Property and Construction survey, which will soon be published, SDLT is identified as one of the key barriers to development by property companies. While increasing the rate of SDLT has long been popular with governments, particularly when it is targeted at overseas investors, any increase is likely to result in a reduction in property transactions, which could result in a slowing of property development generally.

“With both the current and previous governments falling short of their target to build new homes year on year, any increase in SDLT could make the current situation even worse. A reduction in transactions caused by higher taxes could have a knock-on effect for property developers, which feeds through to a reduction in housing starts. While the targeting of luxury developments in central London may capture the headlines, it is important to remember that the same developer who is building in Mayfair or Knightsbridge, is also likely to be building affordable homes in other parts of the country.

“As with any increase in tax, there comes a point where ultimately receipts will start to fall. Coupled with an inflexible planning system and stringent Green Belt policies, a proposed raise in SDLT could make life even tougher for property developers and ultimately those trying to get onto the housing ladder. Fundamentally, it is up to the government to listen what the industry is telling them.”



Comments

Michael Barnes

13:21 PM, 4th October 2018
About 2 months ago

I seem to recall reports of overseas investors buying London property and leaving it empty.
If it is those people that are affected, and the places that are built are being occupied, then it seems like a good idea to me.

But it is probably high-end developments that will be affected, so will not help the average non-professional Londoner.

Simon Williams

10:16 AM, 5th October 2018
About 2 months ago

A long time ago now I had a side-line assisting Chinese nationals (some pretty wealthy) to buy property in London. I can't think of a single buyer who purchased with intent to leave the property empty. Invariably the purchasers fell into three camps: 1. Purchase to rent out (most common); 2. Purchase for son or daughter to live in while studying at UK University; 3. Purchase to use a base for when coming to London on business trips and family holidays (usually as prelude to applying for a tier 1 investor visa).

If you tax the overseas market out of existence, fewer developments will get off the ground because overseas investors were the early-birds providing crucial seed finance/cash flow for developers. You'll also get fewer overseas students studying in London and fewer wealthy people wanting to forge links and do business in the UK.

As we face the massive challenges of Brexit and the need to open up to the world, the last thing we need is to be scaring of overseas investment of any kind. Another stupid policy from this government.

Dr Rosalind Beck

9:01 AM, 6th October 2018
About 2 months ago

Reply to the comment left by Simon Williams at 05/10/2018 - 10:16
Well said. That was my understanding as well. It mirrors the ludicrous idea promoted by the likes of Neil O'Brien, MP, that private landlords somehow 'stole' homes from first time buyers when it was landlords who provided the upfront funding in the first place. So landlords 'stole' homes which without their financing wouldn't have existed.


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

And the landlord vote goes to - ?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More