Stamp duty rise to aid investment industry

In his Autumn Statement last week, chancellor George Osborne announced people buying additional properties and second homes would pay an extra 3 per cent in stamp duty from April 1 2016.

Some believe the change could drive money into investment products.

Rachael Griffin, part of the financial planning team at Old Mutual Wealth, said: “[The] announcement will further dampen interest in buy-to-let, and those considering their long-term savings option away from the property market should think about their other tax allowances, such as Isas and pensions.”

Brewin Dolphin head of wealth and investment management Stephen Ford said the changes would “further reduce demand for [buy-to-let] investments, putting downward pressure on prices”.

Isas and pensions could benefit as buy-to-let investors seek more liquid and tax-efficient investments ahead of the planned changes, Mr Ford said.

But not everyone is convinced asset managers can profit from the change.

Tilney Bestinvest director of investment strategy Ben Seager-Scott said: “I don’t think there’s very much the industry can do to benefit – it’s mostly political bluster, rather than something that’s really investable.

“Clearly, the second home and buy-to-let changes will affect a number of people. But it’s not really an investment asset class that traditional investors access, and is more likely to come through in-house pricing mechanisms.”

Ms Griffin noted that the anticipated buy-to-let boom arising from the introduction of pension freedoms had yet to materialise.

She said: “Prior to the introduction of pension freedoms reforms in April this year, there was significant speculation about a boom in buy-to-let investing from the over-55s.

“Our research suggests that only 7 per cent of those approaching retirement are eyeing buy-to-let income to fund their retirement, down from 11 per cent in 2014.”

Meanwhile, pensions were notable by their absence from Mr Osborne’s package of measures, a development welcomed by the industry after a prolonged period of radical change.

But with further measures set to emerge next year regarding the reform of pension tax relief, the investment industry has continued to urge for a greater focus on creating a “savings culture”.

Investment Association (IA) interim chief executive Guy Sears said: “The IA believes promoting a healthy savings culture should be at the heart of government policy, particularly in light of the ongoing pension changes that mean people are increasingly responsible for providing for their later life.

“We now look towards the chancellor’s 2016 Budget announcement, in which he is expected to announce the results of the government’s consultation on pension tax relief.”