Why this budget needs to get Britain moving again

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First Brexit. Now Coronavirus. With consumer confidence at a low, the housing market faces the prospect of another moribund year – unless Boris rethinks stamp duty and stops over-taxing landlords, in a bid to ease up housing affordability and supply.

That’s the view of property professionals in the lead up to Wednesday’s budget with stamp duty reform top of the wishlist’s of many. “Boris Johnson has previously pledged to implement changes to Stamp Duty legislation by raising the threshold to £500,000. It would relieve large sections of the country from the burden of stamp duty and go a long way to bolstering consumer confidence,” says Iain McKenzie, CEO of the Guild of Property Professionals.

The mooted 3% stamp duty surcharge on Non-UK investors
divides opinion, but its introduction may help ease the “chronic imbalance”
between supply and demand of housing stock, says Jamie Johnson, CEO of FJP
Investment, whose recent poll of 750 UK property investors found that 70% were
in favour of the surcharge. “With such
widespread support, the Government could go further still and also reduce the
tax on first time buyers who have yet to gain a foothold on the property ladder,”
he comments.

It’s expected that the Government will hold firm on its commitment
to repeal Section 21, which will make it harder for landlords to evict tenants.
And it’s unlikely there will be a U-turn on the phasing out of mortgage relief for
landlords. But increasing regulations and taxes are the main reason for 37% of
landlords saying they are looking to sell properties in 2020, according to
research by Accumulate Capital.

“The Government should do more to support landlords to
remain in the sector, not drive them out,” says McKenzie.

Reforming stamp duty is a complex task, however, and compromise
may be the answer, thinks Sean Hooker, head of redress at the Property Redress
Scheme. “I can see a tweak in so far as overseas landlords facing a penal hike.
However, domestic landlords should not expect a rolling back of the past
changes brought in to ‘stimulate’ the first-time buyer market.”

High numbers of landlords may be planning to sell up this
year. But many are considering migrating to the short-let sector, potentially
removing nearly half a million properties from the long-term PRS housing stock.

David Alexander, head of the property management
company Apropos by DJ Alexander, is calling for a level playing field between
the long and short-term rental sectors. “It cannot be right that short term
holiday letting enjoys a more favourable tax environment,” he comments. “Surely the long-term
letting market, which provides permanent homes for millions of individuals,
deserves comparable treatment to a market providing holiday homes for
tourists?”

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