Estate agents are angry that Chancellor Phillip Hammond made no attempt in his first Spring Budget to reform stamp duty - despite being shown evidence of how its current application hits the housing market.
"The government is sticking to its guns and refusing to give the nation a break. We will have to wait until the combined Budget and Autumn Statement [in November] to find out how Mr Hammond intends to tackle this issue. It would be fantastic to see an easing of stamp duty levels across the board to give the property market the vital boost it needs" says Nick Leeming, Jackson-Stops & Staff chairman.
"Stamp duty should be slashed for first time buyers, it is absurd to think first time buyers in London and the South East are finding themselves in the third tax band and are therefore paying a whopping five per cent when first stepping onto the ladder. It is no secret there are less first time buyers entering our market than ever before and this unfortunately has a knock on affect for second steppers and further up the ladder” is how Glenys Frew, chief executive of Hunters.
Current stamp duty levels are “a tax on free movement” in the capital and will continue to punish families in London, according to Jeff Doble, chief executive of Dexters.
“At the very least, the Chancellor should have reduced second home stamp duty on buy to let properties and kept the rates as they are for those with multiple homes they use as residences. These landlords are providing much needed rental accommodation, especially in densely populated cities such as London. The more the government picks on the landlord the more rental prices will increase and home ownership will continue to decline” claims Robin Paterson, chief executive of UK Sotheby's International Realty.
"The lack of any U-turn is, perhaps, not surprising. Whilst the entire market has rallied for this, I think we all knew that the level of revenue it generates for the Exchequer made this unlikely" according to David Westgate, chief executive of Andrews Property Group.
On the lettings side, the Budget made no reference to the phased reduction of mortgage interest tax relief beginning next month, nor to letting agency fees levied on tenants in England, nor on the additional properties stamp duty surcharge.
These were all issues which the lettings industry wanted the Chancellor to reverse or at least moderate.
However, there is concern that changes to self-employed National Insurance and a hardening of government policy towards self-employed incorporation may impact landlords in the long term.
Key to this was Hammond's reference in the Budget statement to the setting up of companies to reduce tax liabilities - something which has happened in recent months in the case of landlords wishing to reduce their liability under the new mortgage interest tax relief regime starting next month.
Hammond said yesterday: "We must ensure that our corporate tax regime does not encourage people across the economy to form companies simply to reduce tax liabilities, pushing the burden of financing our public services onto others. HMRC estimates that existing incorporations cost the public finances over £6 billion a year and the OBR forecast an additional annual cost to the Exchequer from those choosing to incorporate of £3.5 billion a year by 2021-22."
Letting agencies' response to the Budget has been cautious on the issue.
“The gradual removal of mortgage interest relief has been a topic of much discussion and whilst there are many landlords who would have welcomed a U-turn on this, the reality is that this is a phased removal and many landlords report it making little difference to the overall strength of their portfolio. A greater concern might be the future status of holding residential property in a company set-up – but that’s a minefield” says David Westgate of Andrew Property Group.
“Landlords have been used as a political football in the last 12 months. Landlords need attracting back into the space rather than being pushed away. Ultimately, it will be the politicians with red faces, as more people fall into arrears and the social housing space, as they can’t afford private rents anymore" says James Davis, chief executive of online lettings agency Upad.