“The news today that the Chancellor will be introducing a further 3% Stamp Duty on second homes and buy to let property sees the market entering new territory, and without appearing overly gloomy, could be ‘another nail in the coffin’. In my view this will seriously reverberate on the price of second homes and inevitably lower the prices achieved on property within these sectors.
In the longer term such harsh measures could come back to bite the government, as the volume of property transactions will surely slow down resulting in reduced revenue for the Treasury.
While first time buyers seeking to purchase under the ‘right to buy schemes’ may be heartened by today’s announcement to introduce a discounted deposit scheme in London as well as other national measures, the reality is that these further SDLT increases will further impact existing homeowners regressing market activity further, particularly in London, which is quite a different market from the rest of the UK.
The residential market has taken too much of a bruising during the term of this Tory government with SLDT charges, ATED tax and more anticipated with the latest penalties on buy to let relief. Mark Carney has already warned us of a possible rise in interest rates in 2016 that could trigger massive price reductions which inevitably will reverberate on loan to value covenants. You have to question whether the government is prepared for further massive banking problems?
As for the plan announced to build 400,000 new homes, doubling the housing budget, I will believe it when I see it; this may be the plan but sounds more like spin politics than sound economics to me. We are some four years away from the next election, so perhaps it is the Tory’s policy to bring in these punishing measures now in an effort to reduce the impact of negative feeling that will undoubtedly be felt by the electorate closer to the next election. For now its looks like the changes scheduled for next April are set to make 2016 a bleak prospect.”