Buy to let investors should be exempted from the three per cent stamp duty surcharge even if purchasers of holiday homes still have to pay it, says a property expert.
Mary-Anne Bowring - who earlier this week controversially suggested that some tenants should feel free to ask their landlords if they received a mortgage holiday during the Coronavirus crisis - says the disruption and uncertainty caused by the virus will cause a spike in rental demand as would-be buyers hedge their bets.
In addition, she believes rental properties will also be wanted by those who want to buy but who are unable to access mortgages as lending criteria change.
“A stamp duty holiday would no doubt cause a rush of transactions and help breathe life into a housing market that has been put into deep freeze in an effort to battle Coronavirus” she says.
Bowring, who is group managing director at property management firm Ringley, says the government should encourage BTL investors to return to the rental market to help meet the rising demand for rental homes and drive transaction levels.
“The government should be looking at long-term solutions as well as short-term sticking plasters when it comes to fixing the UK housing market” she suggests.
“Eliminating additional stamp duty for buy-to-let investors would help stimulate the supply of rental homes while also driving wider activity in the housing market. Landlords are a crucial source of development finance through off-plan sales and will help support getting Britain building again.”
Bowring's contribution on tenants and landlords' mortgage holidays provoked a debate amongst Letting Agent Today readers - you can check that story out here.
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2% surcharge ??? Property expert ???
Expert enough to become the next Housing Minister - on second thoughts perhaps over qualified, after all she did know that there was a surcharge albeit at the wrong rate.
My dog has more knowledge of property than Bowring.
Anyone, especially journalists, who listen to this person needs their heads testing. Publishing the delusions of self professed "experts" smacks of desperation to fill column inches.
Expert status is bestowed by others experienced in the same industry.
Surely society should promote home ownership first, and then property speculation, at the very bottom of the list.
Speculation: 'engagement in business transactions involving considerable risk but offering the chance of large gains, especially trading in commodities, stocks, etc., in the hope of profit from changes in the market price'. (source: Dictionary.com)
Do you understand the difference in that and letting property Mark?
BTL is by definition a medium to long term business, the complete opposite to property speculation which is all about short term gains.
Just coming onto this thread a bit late.
Your Two points Mark, Home ownership encouragement, and
Investment in providing much needed housing accommodation which the country very badly needs. I'm afraid your Faux Pas of describing this as speculation has annoyed some landlord readers, as it has myself.
First, I don't see anyone disagreeing with your first point. In fact the Govt has gone to quite perverse funding incentives to try to increase Home ownership. However, if you look at survey ( by Landbay in January 20202 of 2000 renters ) of what renters save their money for, a Deposit for House purchase doesn't figure anywhere in the top Ten ! - you can take a horse to water, I believe is the saying.
Secondly, Property purchase, ( apart from 'flipping' - which is the nearest I could suggest to your term speculation ) by Home owners or BTL landlords is usually for the medium to long term, during which values increase. To that there is the minimum if any risk, so where is speculation. ( If by speculation, you mean risk ? )
The Landlord however ( are you a landlord Mark ? - ) takes on significant risk renting to tenants , never moreso on the last 10 years and increasing so.
Risk of Damage, rent default, complex and biased Regulation, Licensing, Taxation to name but a few.
So I don't know what you meant by the term speculation, is it the gamble of whether a landlord is going to get a fair return for their investment against a biased and ineffective Civil Justice system ?
Speculation - Investment in stocks, property, etc. in the hope of gain but with the risk of loss. That's a pretty fair definition. I am not demonizing the activity but see it for what it is. Buy a property, probably with finance, find tenant who pays expenses, and hopefully some profit One day sell for a profit or use asset to secure more debt to buy more and increase exposure for greater profit. This is a business activity with risk.
Then you don't understand what actually goes on. I'm nothing unusual but I have brought numerous properties back into use. Longest term empty one had been lying deteriorating for 14 years, the next 12 years and so forth. Even my own home was long-term empty and was in dire need of renovation.
Some houses I've bought were not abandoned but needed significant work anyway. Some were big (like the 12 year one above) and they've been converted to high spec HMOs.
Not so long ago I looked at my rental portfolio and counted the number of people living in the properties now compared to when I acquired them. Result was almost three times as many! They're not crammed in like sardines but are living in nice homes. Actually there is one exception to that where I have a single mother with 6 kids. She could definitely do with a bigger home but doesn't work and the council haven't got anywhere for her.
This is NOT speculating. I am running a business that provides much needed rental stock. Landlords across the country are doing exactly the same thing. Take HMOs as a good example. If that accommodation had not been created then what would the demand be on starter homes??? What would happen to the price??? What effect would that have on more expensive properties???
It's just one example. I know landlords that convert commercial to resi. I know landlords that buy off plan and thus give the developers interest free loans. I know landlords that source land, obtain planning and then manage the build themselves. I know landlords that buy completed new-builds (any OO could buy if they wished).
Developers don't build a whole estate then put the houses on the market. They will build a few, sell those and then build more. A landlord buying therefore contributes to the addition of extra housing stock.
Do we need more housing or less???
Your idea of what we do is so far from the truth it's laughable. I'd suggest you start going to your local property meets and find out what happens in the real world.
Mark, I’d be curious how you think my tenants (I specialise in HB/UC in one of the country’s poorest towns) could be encouraged to homeownership. Whilst their benefit amount might indeed cover the raw mortgage repayments, they would not have either enough to cover the myriad of other expenses such as insurance, nor the wherewithal to tackle ongoing maintenance, let alone be able to save for a deposit or maintain a credit score in order to qualify for lending. These people absolutely need hand-holding and really should be in social housing, but slowly they are using the ‘Affordable Rent’ calculator (some 47% above benefit rates) to swap places with us in the PRS.
John, FYI, I have successfully been in business for over 35 years, and I am very well versed. What ever you think speculation is or isn't, in my opinion, owner occupiers should be encouraged if possible ahead of Landlords who seek to acquire property to let for a profit. I take it we can at least agree this is an activity driven by profit?
I have no idea why you wish to tell me how long you've been in business Mark. However you clearly have very little idea of what landlords do, which is why I felt it necessary to provide some education. I would again suggest you go along to your local property meet. I see you're London based so may I suggest the Baker St one? You'll find it if you google it, though of course the meetings are currently virtual.
Most importantly what you don't seem to grasp is the positive effect that landlords have had on the supply of accommodation and therefore the limiting effect on property price inflation. This I'm sure you will agree is a good thing as it makes property more affordable for the would-be OOs.
As for profit? Please refer to my previous post where I stated clearly that I am running a business, and therefore aim to make a profit. I assume you do too, or is your business actually a NFP charity? If I were not making a profit then I could not continue to provide the housing.
Owners to be encouraged first? Are they not already? Stamp duty for FTBs is significantly limited and for other OOs none before £125k. A landlord pays when crossing a threshold of £40k and pays an additional 3% too. Plus there is the inflationary HTB scheme and zero CGT on PPR, and usually better mortgage rates for an OO. And now to cap it all a landlord gets taxed on a business cost!
You do know all this don't you?
Name one other country in the world where things are skewed as much toward ownership.
By your definition every business owner in the world is a speculator, including yourself.
In this day and age "speculator" has certain derogatory conotations akin to "spiv" which is why people take umbrance being tarred as such. How would like to called a speculator or spiv?
Investing is quite different from speculating.
And what other country in the world makes it so difficult to remove a defaulting tenant. I concede though that the USA is heading the same direction.
Plus there's over ONE HUNDRED AND TWENTY SEVEN THOUSAND children living in temporary/ emergency accommodation. That's more than the whole population of Cambridge including the students. Do you think those families would buy if they could? What would you propose Government does to 'encourage' them to buy Mark?
The fact is that they are unlikely to ever buy their home and as landlords are quitting in their droves it is likely that the stats will get even worse.
You forgot to add, "IMNSHO".
In the highly unlikely event our greedy, shortsighted and now - due to their own extreme economic incompetence and folly - seriously over leveraged (i.e. seriously in debt) government decided to implement this, it should NOT be a temporary coronavirus "holiday" thing but a simple abolition of this ridiculous, unfair and market (and behaviour) distorting rip-off tax imposed since the dark days of George Osborne - but whose reputation of one of the worst ever chancellors is sure to be eclipsed by useless Rishi Sunak who has done vastly more damage and made far more serious (and in some cases crack-pot) errors since his appointment only recently - late Feb'20 I think.
Imagine if you had to pay a 3% "surcharge" tax for - say - buying a second car while still having another one in your household somewhere? ...and always having to pay 3% extra in tax if you wanted to use an ordinary car as a minicab even only occasionally?
Or if you were a restaurant owner who wanted to expand but had to pay a tax of 3% on the second premises and every further one there after?
Or a manufacturer who had to pay a 3% "second facility surcharge" for any premises (even just outhouses) after the first one......
etc.
Absurd and there'd be an outcry - but landlords and the private rental sector is - for no obvious reason- different because were're obviously here to be fleeced, milked, and generally exploited and cheated and nobody complains and its all just quietly (but grudgingly) accepted because as we are all so pliant and anyhow have no proper, credible professional bodies with "teeth" to fight for us, common sense, fairness (if it exists anywhere, I'm not sure) and our rights and businesses, we apparently just have to accept it and make do.... all of this is VERY WRONG and must soon CHANGE - we need to get organised and fight back ferociously.
Well said, Barry.
Trying to think of someing I disagree with, but nope, nothing to disagree with.
Well put, Barry. About time we all rally together to protect the PRS or get our professional body to do something or tell the top man to step down and let those with teeth to step in to fight for us.
Would a serious property investor want to call themselves a 'but to let Landlord'? I would be surprised. Do they even want to be associated with the sector? In my experience, BTL ownership has never been much more than a punt on the market, a hope that prices will go up. Why else would do these buyers enter the market highly geared, almost underwater from day one. If that is not speculation what is it?
Then you are by your own admission without much experience.
er... Rental Income ( You didn't answer if you were a Landlord, but I guess you just have )
John, not sure i follow your quip, but are you really suggestion the BTL market is made up of sophisticated investors? I don't think anyone thinks that.
It's hard to say why everyone has been so polite to you here, Mark, with comments like that plus your glaringly obvious inexperience and lack of sophistication or real knowledge, you don't deserve it!
You've been given a lot of knowledgeable opinions and views and instead of reading it properly and taking it in and considering it while mulling it over, you've simply tried - every time as far as I can see to just fight back with almost instant, ready made and thinly disguised (as well as very wrongheaded) political slogans or view-points that you've probably been indoctrinated with somewhere or other. You've consistently done that here and also on other blogs/comments boards for other articles...
...."those that have eyes shall see..."
At last, someone with common sense and tell it as it is. This is far more than what nla and rla had said or done for us so far.
Just joined, very surprised at some of the comments made on here, for a second I thought I had mistakenly logged onto a Labour party forum.
Everyone on here sounds like they are running a charity and any profits or financial gain are almost incidental to their main objective of helping people. Wow never thought I would meet so many saints in one place. I don’t know about the rest of you, I have one objective profit. If a tenant cannot pay the rent I couldn’t careless about his circumstances, I run a business not a charity, I will use every legal means to get him removed, it’s the governments job to look after people not mine.
In regards to stamp duty, the surcharge is a useful tool, many landlords are amateurs and their inexperience coupled together with their highly leveraged situation means that they cannot afford the tax and good riddance. A controlled supply of landlords brings professionalism to the market and provides stability in regard to incomes.
I agree with your basic premise Paul, I think the point some make is that for genuine tenants who are engaging, the Landlords is approachable but of course I totally agree that the government has come to regard the PRS as 'recalcitrant sub-contractors ( via Housing benefit ) of alternative 'social' housing provision' that the government are not / unable to provide.
If tenants are on low income it’s the governments duty to provide housing to provide a secure environment for them. The current system of universal credit, set at a level below market rent, simply rewards bad landlords who provide substandard accommodation, rather than professional landlords who provide suitable accommodation at the market rent.
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