Investor activity slows before the introduction of the new rules

The real estate market in the UK experienced a moderation in activity of investors who buy with the purpose of renting, trying to avoid exposure to increased rates of Stamp duty on second property.

The Council of Mortgage Lenders the UK calls on the government to reform before it’s too late, a bill to impose higher rates of Stamp duty at 3% in order to mitigate its negative impact on the real estate market.

In a statement, the Council of Mortgage Lenders said that the market “buy to let” and so, without these innovations, already slowed due to global macroeconomic reasons.

There are serious risks that investor sentiment may change to such an extent that we can begin a serious problem with the shortage of housing for rent. In addition, such a reduction of the rental market may cause an increase in rental rates. About one-fifth of UK citizens living in rented property. In the event of the imposition of increased Stamp duty, homeowners, taking advantage of a privileged position in the market, and trying to cover their costs, will shift them on shoulders of tenants that will make the chances of renters to accumulate a Deposit for their own housing even more elusive.

An additional problem is to change the owner of the property when the person buying your only home, may be required to pay an increased rate of Stamp duty in case if he haven’t sold their first home, or in the chain of buyers had a hitch. Such a buyer must provide 18 months to complete the transaction before you oblige him to pay stamp duty.

According to Director General of the Council of Mortgage Lenders Paul Media, the government must carefully weigh the goals that it sets itself and the effect that will gain from this market. It is the increase in the tax burden on investors will definitely not help to improve the pace of construction, which already lag far behind demand. Private investors are buying property at the planning stage of new projects and this provides the necessary industry cash flow. “Take into account the complexity of the innovation and its implementation, we do not exclude that the new tax burden will bring more problems than it will solve tasks set before the government,” added Paul.

® Helen Entree. G. 25.01.2016

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