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The Taxman wins again First Time property buyers lose again

ALDERLEY EDGE, England - Nov. 13, 2017 - Rezul -- The Taxman wins          Again

So, no doubt everyone is shocked and surprised by the financial impact of George Osbornes stamp duty increases for "Buy to Let" landlords. Who could possibly have foreseen that it would give a £2.7bn tax boost to the Government in the first 18 months. The picture is not straight forward of course as it seems the Treasury is also refunding record amounts of stamp duty. This is going to purchasers who have been dragged into a Stamp Duty merry go round because they have purchased a house before the sale of their old one has gone through. I seem to remember a Chancellor saying their objective was to simplify the tax system, well that went well didn't it.

You might say the Treasury could have foreseen these impacts as part of their day job. They might also have foreseen the flaw in the plan put forward to explain the tax increase in the first place. The tax increase was billed as one of the steps the then Cameron and Osborne Government was taking to help first time buyers. The intention was to discourage landlords from buying more properties and therefore increase the opportunities and property available for first time buyers.

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As expected the only hiccup appears to be that this rationale for the tax increase has not worked out. In fact the first time buyer market has continued to struggle, with an increase of only 8% in the past year. So a Tax take boost for the Government but no real progress on helping first time buyers.

As many observers and ourselves said at the time, the tax changes always looked like a tax grab as opposed to a coherent policy to help first time buyers. The simple fact is that there are too few houses being built in the UK and it will take many years before supply and demand could be re balanced. The Government's Help to Buy campaign was introduced, which is acting as an indirect subsidy to House Builders but even this is a drop in the ocean when we really need to open the floodgates.

Of course the Help to Buy scheme only helps those looking at new properties and developers have more or less adjusted their pricing to take into account the impact of the scheme. For the rest of the housing market, well first time buyers are on their own, with no support and given property prices in the South in fact the punitive stamp duty rates act as a brake on their ability to enter the market. So what the Government gives with one hand it takes back with the other.

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So unsurprisingly the Rental market has continued to thrive, and again as predicted the Buy to Let market has adjusted for the new taxes and is starting to strengthen. Does this mean that the Landlords have passed on the additional costs at least in part to their tenants, well to be honest I do not know, however rental rates are not likely to fall in the immediate future. So we can look forward to a strong Buy to Let market for many years to come, and it will still represent a sound investment when compared to other investments as interest rates are only likely to rise very slowly.

One snippet of good news for First Time buyers might be the rumour of a significant cut in stamp duty being considered by the current Chancellor. I would imagine given the Buy to Let boost to their revenues it must seem sensible to use this to help First Time buyers, let's hope this time the Chancellor turns a rumour into reality.

For info on property purchases visit http://www.buy2letconveyancing.co.uk for details

Patrick Shannon
0345 463 7664
info@buy2letconveyancing.co.uk

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Source: buy2letconveyancing
Tags: Property

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