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Categorized | Property

Public backs stamp duty change, says poll

Posted on April 22, 2016

An estate agent arranges a "Help to Buy" sign amongst a display of residential properties up for sale in London, U.K., on Monday, Dec. 30, 2013. U.K. house prices rose in December and will extend gains in 2014, led by London and southeast England, Hometrack Ltd. said. Photographer: Simon Dawson/Bloomberg©Bloomberg

The stamp duty surcharge on buy-to-let and second homes has won strong public support, according to a poll that suggests people believe it will help first-time buyers compete for homes against property investors.

Asked whether they supported or opposed the three percentage point extra levy introduced on April 1, nearly half of respondents (47 per cent) said they were in favour of the tax, compared with 18 per cent against.

    Landlord groups have attacked the tax, claiming it will drive up rents by reducing the number of available homes in the sector. Solicitors, meanwhile, have complained about its complexity, which puts a greater burden on them to verify the property interests of buyers.

    Paula Higgins, chief executive of HomeOwners Alliance, said the survey demonstrated public support for the view that homes should not be the target of speculative investment: “The stamp duty surcharge might be bad for landlords but it will allow more young people to realise their dream of owning the roof over their head,” she said.

    “This is why we initially called for the tax system to differentiate between aspiring homeowners and property investors.”

    The survey, which quizzed over 2,000 adults, was conducted by YouGov for campaign group Homeowners Alliance and BLP Insurance.

    The findings come as data from HM Revenue & Customs showed a dramatic spike in transactions ahead of the stamp duty change tax as buyers rushed to beat the deadline. The number of residential transactions in March was 75 per cent higher than in February and 77 per cent up on the same month last year.

    The scale of the stampede was underlined by data, also published on Thursday, from the Council of Mortgage Lenders, which estimated that gross mortgage lending reached £25.7bn in March. This was 43 per cent higher than February, 59 per cent higher than March 2015 and the highest March figure since 2007.

    House prices also rose sharply, according to the Hometrack UK Cities House Price Index, which found house price inflation in British cities rose 4.2 per cent over the first three months of 2016 — the highest quarterly rate of growth for 12 years.

    Serious money

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    Lucian Cook, head of residential research at agent Savills, said the data confirm a “frenzy of buying activity” in the run-up to the stamp duty change — but warned of a subsequent drop-off in sales. “This is clearly a one-off event and such volumes are unsustainable against a backdrop of economic uncertainty and the prospect of an increased regulatory environment for buy to let borrowing.”

    Mohammad Jamei, CML economist, said the distortion the levy caused was larger than under any previous stamp duty change.

    “As a result, we expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March,” he said.