Chancellor George Osborne announced that stamp duty will be hiked by 3% for buy-to-let landlords and people buying second homes from April 2016 in the House of Commons today.
Williams said: : “Following the decision to reduce their mortgage tax relief, the stamp duty changes for second properties and buy-to-let are another surprise development that once again puts landlords in the political cross-hairs.
“The government must be very careful not to go too far and overly constrain the private rental sector, which performs an essential role in the housing market.
“For all their new initiatives, successive governments have a poor track record of delivering the required number of new homes, and a healthy private rental sector is vital for those either needing to rent or choosing to do so.
“It is disappointing to see the Chancellor’s building programme comes with rhetoric that pits tenures against each other, rather than as part of a joined-up strategy for the housing market as a whole.”
Williams doesn’t expect the 3% change to make a major difference on its own however.
He added: “The Stamp Duty changes will impose higher initial costs for investors but most mortgage deals should be able to absorb a slightly higher loan size, if the borrower requires, within lenders’ existing guidelines.
“Data suggests that landlords invest for the long term, so this change is unlikely to materially reduce activity on its own.
“Nevertheless, it is one of a number of measures that make running a residential property business less attractive, which may constrain further growth in the private rental sector and add to inflationary pressures on rents.”
Williams was encouraged by the newly launched Help to Buy: Shared Ownership and London Help to Buy schemes. Osborne said he will remove restrictions on who can buy and build and with London Help to Buy he pledged to provide a 40% equity loan for first-time buyers in Greater London with a 5% deposit.
Williams responded: “Housing is finally moving up the government agenda and doubling the housing budget from 2018-19 should not be sniffed at.
“Greater support for shared ownership is an encouraging move, and should tempt local authorities and builders back to this market alongside housing associations.
“All the same, there is a risk that Help to Buy: shared ownership and London Help to Buy will add to the multiplication of different schemes, each with variants that make them challenging for lenders to deliver.”
