Property in the news: Stamp duty surcharge ‘windfall’/Right to rent fines/Cornwall & compulsory purchase
Stamp duty surcharge 'windfall'
Repeated calls have been made for the government to rethink the stamp duty regime, and the extra 3% tax which has applied now for almost a year. This affects mostly buy to let purchases and those of second homes. It has also had some unexpected consequences, notably for leasehold owners seeking lease extensions. It regularly also catches buyers who buy before selling and have to later reclaim the surcharge, with delays currently of 40 days to have such claims completed.
The now none level playing field which is the stamp duty regime, coupled with other tax changes is reported as causing landlords to exit the market, reducing the availability of affordable property to rent, and giving rise to an increase in rents.
There is however little incentive for the government to heed such calls, given that the figures released by HMRC show the tax raised in 2016 as a whopping £625 million over the forecast. The total raised by the surcharge accounted for some £1.19 billion, out of £8.28 billion overall. The 2016 figure is up 17% on 2015 and 9% on 2014. In addition this is a cheap tax to collect, as this is all done by conveyancers.
The figures do not indicate the surcharge has caused any cooling off with some 119,000 transactions subject to the surcharge in the last six months of 2016. However there appears to have been a reduction of buyers buying to let and requiring a mortgage, likely down to the impact of the removal of tax relief this April and other measures which target landlords. Clearly whilst interest rates for savers remain practically non-existent, the additional stamp duty has not deterred cash buyers looking for an investment with an income return and possible long term growth.
Right to rent fines
Landlords can be forgiven if they do retreat from the rental market as they face new regulatory challenges both local and national. The latter including the 'right to rent' scheme which commenced across England on 1.2.2016 and requires landlords to check the immigration status of their tenants. According to the government, since its introduction, 91 landlords have been issued with fines totalling £29,575.31. In addition 667 enquiries were made to the Home Office's landlords checking services specifically regarding tenants without the right to rent. Of the penalties, 55 related to lodgers in a private household and 51 related to occupiers in rented accommodation, and none have been appealed.
Cornwall & compulsory purchase
Prospective purchasers in parts of Cornwall may be having second thoughts after reports that Cornwall County Council has considered the compulsory purchase of homes in areas where air pollution exceeds EU limits. Albeit mooted as a controversial last resort, it could be the only affordable option to enable it to comply with its statutory duties. Areas concerned are in Camborne Camelford, St Austell, Truro, Tideford, Bodmin, Pool, Gunnislake & Redruth.