A response to the Consultation on Higher Rates of Stamp Duty Land Tax

I have two queries: If a BTL investor were to sell their residential home to move to another home would they now have to pay the higher rate of SDLT? Also, my son is looking to buy his first home with his new wife next year. In reality they are both first time buyers, but in common with a lot of parents, I have put his name on a couple of my BTL properties although in practice he receives no financial benefit from this. Will he now have to pay the higher rate of SDLT?

I agree wholeheartedly with the comments so succinctly put by BTL Investor. I am only able to comment on landlords in this part of Mid Wales, but the majority are individuals owning fewer than 15 separate properties. The actions taken by this government to date will only make investors less inclined towards providing additional housing available to rent at affordable prices. It would be interesting to find out how many properties are let by small investors nationally. It is possible the figures may give GO cause for further thought.

Reply to the comment left by "Barbara " at "04/01/2016 - 12:48":

Hoist with your own petard. I have done exactly the same but fortunately both my sons have just purchased their own house. Yet another reason to incorporate, keep all your business properties separate from your main residence.

One can not generally justify prejudicial action against any group on the grounds that they are a minority. How many properties one owns is irrelevant. We are not living in the middle ages. Either a tax is fairly applied or not fairly applied. ...When ..in modern times has it been morally argued that you can attack a group because they are few in number.??? only in the documents of this gov. policy ( background papers do exactly that )..quote..."only ..one in five landlords. will be affected "" etc....that is not a justification.. although it sits in the papers where they seek to do so...We shouldnt make the same mistake by arguing that only a certain section of landlords should suffer clause 24 or indeed the Cap G.Tax..we must be united........ NOTE WELL>>. As i read the tax law and cases etc..such a prejudicial and specific tax has to have an evidenced rationale of a pre existing proven problem that will be dealt to by such a draconian and prejudicial change. Here the Govmnt. have argued that the "playing field" was uneven..BUT made no mention whatsoever of CPG tax being only paid by landlords and not at all by ordinary homeowners. So most landlords lose 40%.of price gains..potentially whilst ordinary homeowners pay nothing. The playing field sloped against us in fact. A fundamental and gross flaw in their alleged rationale...of "an uneven playing field ".... for would be home owners....and of a huge scale. !! Solid fact.
Secondly they (Gov,) have spoken about competition and landlords driving house prices up.
Again a fundamentally flawed argument..totally unarguable in fact since simple mathematics dictate that with 16 or 17% of houses ONLY in landlords hands/being bought by landlords...there is a very strong case IN FACT to say it is almost impossible for us to have a significant effect on house prices..... precisely because we are and remain a very small minority..Also landlords will generally look to buy actually at or even slightly below market values.. precisely because they are landlords and are buying for business purposes rather than for emotional or convenience reasons. You cant drive the price of any commodity up when you are buying only around sixteen percent of stock and trying to do so at market or below market values.Solid numbers..solid fact...NOTE WELL>>> The maths on that are absolutely clear.We can not have significant effect on house prices because of these facts. Its just not mathematically possible. If the chancellor cant do basic maths he should ask a mathametician!!...Therefore the two cornerstones of the governments rationales are completely unfounded in terms of justifying this draconian and prejudicial tax. These points are very key in our legal submissions. The government has also failed to provide any evidence in support of both claims and with the above facts speaking very loudly in the opposite direction the base for this change crumbles.>>> I hope these issues are made clear when our case is put to judicial review.<<<<<<<<
I would also again ask that all parties to this debate including a few landlords i might add....stop perpetuating the myth of "soaring" uk house prices. Take the time to look at the gov,s own office of stats charts...or nationwides ..or halifax..for say the last twenty years...on.UK house price growth...NOTE UK..after doing so...no sane person could say we have "soaring" house prices..Such a statement is entirely wrong..Again i may i point out that the charts include greater London. Even with Gtr. London included the chart does not represent anything of the sort. Take greater London out...and its actually been a depressed market in the UK generally for several years.
I hope these three matters will be clearly put in our case presentation.. as all three are strictly mathematical facts rather than matters of opinion or even interpretation...40% Cap Gain...16 or 17% market share....and the house price stats charts....Apologies if this sounds a bit strident but it happens to be true...................
SO..how has this foolishness occurred..C 24 ( politics aside ! ))...???????????
Anyone in the south east is daily confronted by a somewhat different scenario on h.prices...i accept that.. but...there are 65 million of us....and i believe only about 10 mill. in greater London.The London based and London centric thinkers who have created this new clause need to be forced to pause and address the three mathematical facts..Their claimed rationales are unevidenced nonsense and the maths on all three factors which are, perhaps surpsingly, very clear....IF.. one bothers to leave the hype to one side and check facts. I think we can win our case if we are clear on these three aspects and they are put in a compelling way . I think we may lose if we create a fog of issues and presentations. The rationals for this draconian tax are completely and demonstrably flawed.Lets us make that out clearly and simply. The numbers speak very loudly for themselves.

Agree prices do not seem to be rising in most areas. In the cities where it is getting in a potential bubble, it is not the houses that FTBers are trying to buy that are shooting up but the £3/4m + properties hat are rising fastest by foreign speculators in my view. But being of such high value they distort the figures of increase when stated by value, rather than by number.

Reply to the comment left by "Chris Byways" at "04/01/2016 - 17:08":

Yep chris I agree that is certainly a factor ...and again greater London and the surrounding south east.... leverage the so called average house price fig. for the whole uk..whilst in truth being a minority of total housing stock for the uk....which is a nonsense as any average will usually be close to the middle fig between most and lowest paid. The average house price fig so often banded about.. is therefore a nonsense...but hey it makes for a punchy headline ...There are very major other factors as well that make a total nonsense of price growth figs on houses...I wont go there just now...anyway....... the other major cities..... for eg Leeds..etc..(4th largest city ??)... have seen nothing even approaching the greater London situation .Many areas have actually had historically low house price growth or stagnation in recent years....a very significant number of towns and areas outside the south east have only just got back to around 2007 price levels...............still the "soaring" uk house prices myth continues !
Its also apparently lost on the government and Osborne in particular that first time buyers use mortgages.The REAL cost of buying a home is the mortgage. Not what it says in the estate agents window....Mortgages have never been cheaper in living memory!! There are still fixed rates out there with very modest deposits at around 2% pay rate. That is the real cost of buying...historically cheap !!...Returning to the "powers that be " and their rationales..
Contrary to what Mr Carney believes the biggest threat to the market is not landlords....but ordinary home owning folks who have taken so called tracker products linked to rates based on Bof E..PLUS lenders margin..which as we have seen...can also be anything the lender currently thinks they should be.....based on the LENDERS current commercial position!! ..( West Brom, et al ) in addition to general economic exposures...Watch what happens to these home owners when rates get back up around 3% at B of E ...PLUS lenders margins on top.. .......literally millions of normal homeowners..... have taken those deals. Certainly they are far far more than we landlords who only have around 16% of H. market.stock......eerrm by my maths if a third of us sold half our stock .. over say two years....that isnt going to be a major drag on house prices..it certainly doesnt threaten the economy.....maybe maths and housing is different in Canada ?.Mr Osborne and Mr Carney are tampering with a market they dont understand and im afraid their perceptions are very flawed. They cant or will not do the maths and they cant or will not read history..and there is plenty of it to be read ref housing market tampering by gov.s elsewhere. No government has come out of such market interference with positives...and in terms of supposed rationales this is by far the least rational tampering of any so far.

Good points, but
1) I would give Carney the benefit of the doubt, he is right to flag up the potential BTL if it continued unchecked. But surely the answer is so easy, reduce FUTURE LTVs enough to subdue demand. GO has taken has sage words to justify his tax grab/vote buy.

2) you didn't mention the Irish experience, as well as history! ?

I am convinced most of these stats should be divided into four categories:-

A) London/SE & a few major cities and

B) the rest of the U.K. Where there is near stagnation or deflation.

C) the affluent 4 bed, average or above priced properties and those owners or tenants that DO afford these.

D) the 'value' end, 1 or 2 bed, cheapest available in the area. Often on benefits, hard to rehome

All the generalisations will not help when talking of rent rises or evictions.

See also DPS survey

http://www.24dash.com/news/housing/2015-11-25-Landlord-tax-changes-will-lead-to-rent-increases-survey-suggests

Reply to the comment left by "Barbara " at "04/01/2016 - 12:48":

Regarding your purchase I would say no. Regarding your son I would say yes....as if his name is on the deed then he already own a property. If they are not married. ....maybe it's worth buying under her name with a declaration of trust?

Reply to the comment left by "stuart edwards" at "05/01/2016 - 08:51":

why would it be different for barbara compared to her son? cant see the significant distinction; babs still owns other property as does her son.

Joe. The difference is that I own a residential property that I live in. My son is on the deeds with me of a couple of one-bed BTL flats and under the terms of the BTL mortgages he cannot live in either even if he wanted to so he rents (and would like to buy) locally to his work. Of course if my husband and I wanted to upgrade our home we would have to pay the higher rate of stamp duty to do so - another thing that does not apply to people who haven't invested in property other than their own homes (and another example of the non-level playing field between landlords and everybody else in my opinion).