Stamp Duty  

Property fund calls for new build stamp duty exemption

Property fund calls for new build stamp duty exemption

A property investment fund has called on the next government to exempt buyers of new build properties from the 3 per cent additional stamp duty charge.

The proposal forms part of a five-point plan put forward by London Central Portfolio (LCP) to counteract a steep decline in new build sales and an anticipated 250,000 shortfall of homes promised by 2020.

According to LCP, successive increases in residential taxes over the past five years have led to a 41 per cent drop in new build sales in the capital.

The organisation claimed that, with average prices starting at substantially more than the UK average, clamping down on the sales of expensive new builds will not provide more housing for aspiring homeowners.

And with sales in London down by 29 per cent, LCP claimed the slowdown is affecting developers’ ability to provide further private and affordable housing.

It said relief from additional rate stamp duty for new properties already under construction would help to maintain the “essential” ‘parallel housing market’ funded by foreign investors, which provides the cashflow necessary for developers to build more domestic homes.

LCP has also called on the new government to rule out any further changes in property tax legislation during the next parliament, arguing that successive Stamp Duty hikes have increased levels of uncertainty, which are being amplified by Brexit.

But Ruth Whitehead, owner at London-based Ruth Whitehead Associates, pointed out that the 3 per cent stamp duty charge only applies to second homes.

“I would be keener on measures designed specifically to assist the residential market rather than the buy-to-let market,” she added.

“There is a whole raft of reasons behind the slowdown in the market. I would not say that making housing slightly less expensive for second homebuyers does anything other than line the pockets of the developer.

“The statement about developers doing less building is utter rubbish, because all the housing developments we have seen have had far less social housing than they should have.

“If developers have properties on their books that they are not selling, then they are too expensive. The developers have a profit-driven agenda, and all they are talking about are things that will drive profits up.”

LCP also called for a more incentives for landlords to provide rented accommodation, and greater regulation of illegal short-letting and websites such as Airbnb.

The firm’s final proposal was for a review of recent increases in business rates, which it claims could stifle entrepreneurship and have a knock-on effect on the wider economy.

simon.allin@ft.com