A prominent industry figure says the current stamp duty holiday could effectively be a trap to lure in buyers who will later be expected to pay much harsher new property taxes.
David Alexander, joint managing director of PropTech platform apropos, says he fears the Chancellor’s review of Capital Gains Tax could mean that buyers tempted into purchasing during the SDLT holiday may be clobbered by the Treasury later.
“The Chancellor should be credited with ensuring that the property sector has come out of lockdown fully functioning and, dare I say it, almost thriving. This is terrific news, but the concern is if the current CGT review is being used as a means of recovering many of the gains made in these present purchases through a greater CGT take in the future” warns Alexander.
“With an enormous deficit to cover the Chancellor may be giving SDLT savings with one hand only to take these gains away through increased CGT later. The temptation is to see the SDLT giveaway as a means of drawing more people into the market and then taking more back through CGT when the property is sold. This could be an extremely clever means of increasing the tax take for the Treasury for decades to come” he adds.
Alexander admits that the stamp duty change - and similar measures applying to the Land and Buildings Transaction Tax in Scotland - has had the desired effect of accelerating the volume of deals in the post-lockdown period.
But he adds: “The CGT review is broad based and is examining everything from main residence homes to landlords and property investors. Targeting homeowners would be politically difficult and controversial so may not occur but there is every chance that the real long-term target are landlords, investors and second homeowners.”
He says that what the market needs most of all now is stability and that it would cause “serious problems” if the government’s tax regime led to a property downturn.