With new housing starts across London falling from 33,722 in 2015 to 27,259 last year, a report in today’s (3 October 2018) Financial Times, reveals that proposed plans by the government to raise Stamp Duty Land Tax (SDLT) for non-residents and overseas companies with plans to invest in the capital, has been met with criticism from property developers.
Commenting on the report, Stacy Eden, Head of Property at national audit, tax, advisory and risk firm, Crowe, said:
“In our 2018 Property and Construction survey, which will soon be published, SDLT is identified as one of the key barriers to development by property companies. While increasing the rate of SDLT has long been popular with governments, particularly when it is targeted at overseas investors, any increase is likely to result in a reduction in property transactions, which could result in a slowing of property development generally.
“With both the current and previous governments falling short of their target & plans to build new homes year on year, any increase in SDLT could make the current situation even worse. A reduction in transactions caused by higher taxes could have a knock-on effect for property developers, which feeds through to a reduction in housing starts. While the targeting of luxury developments in central London may capture the headlines, it is important to remember that the same developer who is building in Mayfair or Knightsbridge, is also likely to be building affordable homes in other parts of the country.
“As with any increase in tax, there comes a point where ultimately receipts will start to fall. Coupled with an inflexible planning system and stringent Green Belt policies, a proposed raise in SDLT could make life even tougher for property developers and ultimately those trying to get onto the housing ladder. Fundamentally, it is up to the government to listen what the industry is telling them.”