A letter from the Financial Secretary to the Treasury appears to suggest that the government is set on implementing the three per cent stamp duty surcharge on April 1 irrespective of the consultation exercise still continuing.
The letter came about after comments about the surcharge and other recent government proposals from Estate Agent Today and Letting Agent Today readers. The comments were passed to the office of Prime Minister David Cameron by Andrew Goldthorpe - chief executive of PropertyMutual.co.uk and owner and managing director of PropertyPortal.com - who lives in the PM’s Witney constituency.
The PM’s office in turn passed the comments and a covering email from Goldthorpe to David Gauke MP, Financial Secretary to the Treasury.
The text of Gauke’s reply is reproduced below but a key sentence - contained in paragraph five - appears to suggest the government is already wedded to the April 1 introduction of the surcharge, irrespective of the results of a formal consultation process now underway.
Goldthorpe had raised the unusual timing of the start of the consultation, and its shorter-than-usual duration which appears to fall short of the government’s own guidelines.
Gauke’s fifth paragraph in full reads (with the key sentence in bold): “In his email, your constituent expresses his concern that the consultation period is too short and that the consultation document was published over the Christmas break. I would like to reassure your constituent that the consultation process is full and open and that his and other respondents’ views will be taken into account. The consultation period is shorter than 12 weeks so that my officials have time to properly analyse the responses we receive so the final policy design can be confirmed and come into force by 1 April.”
The final sentence of this paragraph, in bold, has led Andrew Goldthorpe to comment: “In other words, it appears to me that the government never had any intention of allowing the consultation to meet their own recommendations, and intended to disregard objections as this legislation was always going to be pushed through by 1st April.”
Here is the complete letter from David Gauke to David Cameron:
“Dear Prime Minister
“Thank you for your letter of 20 January enclosing correspondence from your constituent Mr Andrew Goldthorpe ... about the changes to Stamp Duty Land Tax (SDLT) announced at the Spending Review and Autumn Statement 2015.
“From 1 April 2016 higher rates of SDLT will be charged on purchases of additional residential properties, such as second homes and buy to let properties. The higher rates will be three percentage points about the current SDLT rates. This is part of the government’s commitment to supporting home ownership and first time buyers.
“It is right that people should be free to purchase a second home or invest in a buy to let property. However, the government is aware that this can impact on other people’s ability to get on to the property ladder. This policy is not expected to have an effect on rent levels and it is worth noting that SDLT is only paid once, when a property is purchased.
“The government does not intend for higher rates of SDLT to apply to those making significant investments in residential property given the role of this investment in supporting the government’s housing agenda. The government is currently consulting on whether an exemption for purchasers making significant investments in residential property is justified in some circumstances and how it can best be formulated.
“In his email, your constituent expresses his concern that the consultation period is too short and that the consultation document was published over the Christmas break. I would like to reassure your constituent that the consultation process is full and open and that his and other respondents’ views will be taken into account. The consultation period is shorter than 12 weeks so that my officials have time to properly analyse the responses we receive so the final policy design can be confirmed and come into force by 1 April.
“The consultation is currently open and available online and I would welcome any further views your constituent has as part of this. Responses may be sent to: sdltadditionalproperties@hmtreasury.gsi.gov.uk.
“Please pass on my thanks to Mr Goldthorpe for taking the trouble to make us aware of these concerns. I hope this reply has been helpful.
“Yours ever, David Gauke.”
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Not only was the consultation period too short (as has been admitted) but its existence was sneaked out between Christmas and New Year, making the consultation period effectively two thirds shorter than it should have been.
The other inference is that there is barely enough time for the powers that be to analyse the responses effectively.
To add insult to injury, the implementation date is likely to be the 1st April (quite fittingly April fool’s day!). Barely two weeks after the final announcement in the budget. A ridiculously short time for conveyancers, estate agents, the public and others to plan and adapt.
Not only does the whole process stink, but the proposals if carried forward, are a car crash waiting to happen.
All the Government have said they will do is to 'listen' to the concerns of the consultation exercise, it would have been a naive assumption from those submitting missives to have believed that 'listening' would become 'stopping'.
I would respectfully suggest that at the most the Government might do, and I stress the word might, is to perhaps delay or extend the phasing in of any changes - that's all.
Since, for many years, landlords have had access to an incredibly and incredulously low rate of interest to grow their own assets, (along with home-owners I acknowledge) and have had rents underpinned by a minimum rent guarantee (otherwise known as Housing Benefit), the Government has had to act to introduce some measures to draw this method of printing money to a close.
I appreciate that landlords and by association letting agents will consider this to be unfair, a tax-grab on the 'helpful' landlord etc, however, by introducing this policy, with at some stage undoubtedly a stronger capping for Housing Benefit, there will be a re-balancing of rental properties. Yes, I believe the recipients of Housing Benefit will come under pressure too, will everybody be up in arms if/when this happens?
By this I mean, yes, some landlords who haven't worked their figures out will find it necessary to sell, however, surely they'd accounted for interest rate rises and that would also have reduced their profit margins in a similar fashion to the planned Governmental changes?
Other landlords, however, will be watching and waiting, biding their time for when opportunities to purchase stock from those landlords appear.
Truly we are moving into interesting times.
As a developer, I think it's good for me as too many investors in the market paying over the odds of an assets real value. They come to the auction geared up to the max, paying silly money only to realise in later years after all costs, they've paid too much. I am glad if takes the heat out of the market and will stop another bubble. .........................................
The market for buy to let over 250k will be decimated because most won't be able to finance the higher stamp duty costs. For me anyway, it will take out many the idiots who don't know what they are doing anyway.......you see them on 'homes under the hammer' buying a property, refurbishing it wasting months working on it when they could have purchased the same property with the same or better yield at auction, if they'd done their research properly for the same yield, but without doing anything to it. So good bye dumb ass investors, paying over the odds!
Of course they'll push ahead regardless of the consultation. It's what governments do. They say they listen to the people and the industry experts, but they don't really. Just look at the junior doctors' strike. If people don't like it, to hell with them.
Osborne has made a massive mistake with his attack on buy-to-let investors and it's going to come back and bite him very hard.
I hope they push it through, because it will benefit people who have to earn a living from the property game, and remove over geared buyers paying over the odds, and putting up prices, which always ends in a crash like it did in 1990 and 2007..........
Look further to see how this all plays out and it should be good for the industry.
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