Immediate rise on SDLT for buying second home in £40 Bn Tax rise budget
In a shock announcement that nearly made me fall off the sofa as I watched the Chancellor of the Exchequer Rachal Reeves in full flow, she stated that as of midnight on the 30th of October 2024, anyone buying a second home and completing will be paying SDLT at a whopping 5% rate. At present the level is 3% for such transactions.
It is clear that this government is for the workers or rather, in a misguided way the ‘working class’ which Starmer and his cabinet seem to think may not be Landlords. Any rise in the cost of buying a property asset to then rent to a tenant, increases the rent that is being sought. Extra taxation just means higher rents, less landlords buying property which in turn reduces supply of rentable property which inflates rents – after all the PRS is a marketplace.
Typically a large swathe of landlords each year sell at least one property that they rent out, typically the one that is problematic and needs a lot of maintenance or has a diminishing lease etc, and it is ‘swapped’ for another new property that is added to the portfolio. With the 5% SDLT coming in, this may stop this happening.
With the Renters’ Reform Act on the horizon, overtly weaponizing the protection for tenants at the cost of the rights of a Landlord to do what they like with a property they have financed and own, we may see a growing exodus of Landlords from the PRS. Now Reeves et al may thing ‘good riddance’ but of course where then do we house people who have nowhere to live?
The local housing associations are already underwater, run so badly that 8% of their housing stock is empty and in need of repair before it can be let, and we still have the farce of social housing being sold off with discounts as large as 50% for a council tenant after only three years of living in it.
This is how I see it, many ‘working people’ are accidental landlords or buy a rental property to provide for the shortfall that they see on the horizon when they get to pensionable age. So Labour’s vision that Landlords are a parasitic band who squeeze money out of the poor is just a bad joke. Landlords in the PRS provide a symbiotic service that gets a roof and four walls around those who cannot afford to buy, or need the flexibility that a rental affords.
The property market itself is stagnant, yes mortgage applications are at a high level, which is because a large amount of Landlords are selling up to try to beat the now higher rates of taxation that were signalled. In reality the cost of borrowing means that second steppers cannot afford to sell their semi-detached home and buy that four-bedroom detached, because borrowing with a large mortgage at 4.67% as an average on a two year fixed is a huge cost.
So Racheal is adding another body blow to the property market, which seeks to lessen the amount of active buyers at the bottom of the housing market will just add another layer of distress to the marketplace. In just a week’s time the Bank of England will either lower, rise or keep the base rate the same, it will be a great indicator of their thoughts on this giveaway to the working person budget.
Personally, if you have a big black hole in your finances, looking to fix that by borrowing the largest amount of money any government has, and justifying it by saying the previous party caused it, is lame. If you are in charge of the UK PLC’s finances it is your duty to look forward and promote growth, not hark back to a government who was voted out and blame them.
In all of this I am being partisan, the previous government did zero for the property industry apart from lining the pockets of National Home builders who have built many properties that are now unmortgageable due to cladding and major building defects. Gove the housing secretary failed to solve this or get a large number of new homes built.
Labour will also fail to deliver the mythical 300,000 homes a year, yes they will probably turbo charge social homes being built, but that is not going to move the dial, and of course who pays for this housing stock – we do the workers and non-workers of the UK. So far this year in one three month period less than 30,000 new homes were delivered – so those sums are not going to add up.
Do not even get me started on the class war that seems to be breaking out … I thought all this was a relic of the 1970’s when I was growing up, but now with the Chancellor hanging a picture of Ellen Wilkinson a founding member of the British Communist Party in the chancellor’s office I see old labour is still thriving.
I am not looking forward to a socially planned way to live my life – whoever gets to run the country should rule in the interests of all stakeholders. This £40Bn budget puts the weight squarely on the SME’s that actually provide the revenue that runs the country, dampen that we get a recession.
And on a personal and business level, here at Proptech-PR we work daily with 136 proptech founders with a combined market capitalisation of £1.47Bn and my mobile is already pinging and my other messaging systems are going to meltdown. So I think yes Rachael has stimulated the tech industry and industry on the whole but not in the way she would like, as the Alternative Investment Market is going to see a continued number of people cashing in and worst not investing in the first place.
Andrew Stanton Founder & Editor of 'PROPTECH-X' where his insights, connections, analysis and commentary on proptech and real estate are based on writing 1.3M words annually. Plus meeting 1,000 Proptech founders, critiquing 400 decks and having had 130 clients as CEO of 'PROPTECH-PR', a consultancy for Proptech founders seeking growth and exit strategies. He also acts as an advisory for major global real estate companies on sales, acquisitions, market positioning & operations. With 100K followers & readers, he is the 'Proptech Realestate Influencer.'
