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Stamp Duty surcharge comes under savage attack: Ministers told to turn back
Original Author: Rosalind Renshaw
An attack on the Government’s strategy of taxing the purchases of second homes and buy-to-let property has come under fire from an unexpected source.
Consumer group the HomeOwners Alliance said there would be “massive unintended consequences”.
Today – February 1 – the official consultation on the 3% Stamp Duty Land Tax surcharge finishes, after just seven weeks.
The surcharge would apply from April 1.
The HomeOwners Alliance called it “dangerously flawed” and said the Government “must go back to the drawing board”.
While it said it supported in principle the policy on second homes, it said the way the Government is planning to introduce the surcharge is “overly complex and flawed”.
The organisation is particularly concerned at the 18-month window proposal.
People buying a new home before selling their first would have to pay the surcharge.
They then have an 18-month period in which they must sell their first home in order to get a refund.
If they fail to sell within the 18 month window, they would lose the right to a refund.
The proposal would also affect people relocating, for example for work reasons, and who might normally rent out their original home while buying in a new area.
If they did, they would have to pay the surcharge.
Paula Higgins, chief executive of the HomeOwners Alliance, said: “It is great the Government is trying to use Stamp Duty to help home owners, but they have made a real hash of it.
“The ridiculously complex way they are planning to introduce the scheme will end up harming many of the very home owners it is meant to help, and lead to widespread confusion among home buyers.
“We are already being contacted by distressed home owners who have worked out they will be caught by it, and not be able to buy the home they want to.
“Rather than push ahead with a well-intentioned but dangerously flawed scheme, it should go back to the drawing board and put it right.”
Meanwhile, Peter Williams, of the Intermediary Mortgage Lenders Association, slammed the short consultation period – which is too short by the Government’s own criteria.
He said that the Government has “no view about how this tax will impact on the market as a whole, let alone the buy-to-let market”.
He said that the extra tax would eventually be swallowed by purchasers, but would put extra pressure on rents.
He added: “It doesn’t seem at all sensible.”
The Council of Mortgage Lenders was also highly critical.
Director general Paul Smee said: “There is a risk of overkill in dampening investor sentiment to the extent that the flow of available private rented property could be disrupted, without any necessarily corresponding increase in the ability of households to become home owners.
“In addition, with around a fifth of households currently renting in the private sector, there is the perverse risk that the SDLT increase could cause landlords to charge higher rents, and so actually make it harder for tenants who want to buy to save the deposit needed to do so.
“We urge the Government at least to move away from a position where people will have to pay and then potentially claim back to one where payment is deferred, and only triggered if the buyer genuinely falls into the intended target category.
