Raise stamp duty threshold to boost property investment

The chancellor Phillip Hammond should use his upcoming Autumn Statement to raise the Stamp Duty Land Tax (SDLT) threshold to £250,000 to encourage investment in the residential property sector, according to Rob Ellice, the chief executive of online property agent easyProperty.

Elice believes that freeing more homebuyers from the 2% levy that currently kicks in on properties costing over £125,000, would not only more enable young families and first-time buyers to get on to the first and second rungs of the property ladder, but would also encourage more investment in the residential property sector.

The head of the online estate agency points out that over the past decade, between August 2006 and August 2016, average property prices rose by 27.28% across the UK and 90.46% in London alone, according to Land Registry statistics (excluding Scotland).

Based on these values, the average UK property transaction generates £1,879 and for London transactions, £14,445.

He commented, “Last November the then Chancellor, George Osborne, announced significant SDLT changes that some might argue stumped the Buy-to-Let market, led to a fall in central London values, and arguably stalled new developments across the Southeast.

“Osborne had the foresight in the recession to increase the SDLT threshold to £250,000 for first time buyers to help prevent a market freefall. We are now, again, on the cusp of economic and political uncertainty as a result of Brexit and I believe we need to encourage property investment – for homeowners and institutions – by upping this threshold once again. A lot has happened in 10 years and this would be a shot in the arm to encourage investment.”

Ellice also wants to see the chancellor create tax incentives for the Build to Rent sector in the upcoming Autumn Statement on 23 November in order to help boost the supply of much needed rental accommodation.

He continued: “The dawn of the Build to Rent sector is here to stay and I encourage The Rt Hon Philip Hammond MP to recognise and foster this asset class by announcing new tax incentives for institutions during his upcoming Autumn Statement.

 “Any investor looking to create more than 30 properties within one site shouldn’t be penalised for creating new homes to house the growing British population. The government needs to work with housebuilders to help meet the nation’s growing housing demands.”

Ellice outlined that institutional incentives could include a SDLT exemption, larger discount for repairs and maintenance of up to 60%, delayed CIL payments, and tax incentives for individuals to invest in property funds that solely own Build to Rent assets.

He also argues that allowing or incentivising individuals to directly invest into Build to Rent funds could alleviate pressure and competition for the buy-to-let sector investing in individual properties, which could steady house price inflation. The justification is these funds could produce more competitive returns than rental income from individual homes.