The additional SDLT cost has been seen by many as a hurdle to investment in “build to rent”.
In the lead up to the Autumn Statement, Melanie Leech (Chief Executive of the British Property Federation) commented:
“The truth is the sector could be delivering so much more, however, if it can find the opportunities and maintain confidence to invest…the sector was kick started a few years ago with support from Government and further modest planning and SDLT changes we believe could firmly send it into overdrive”.
This comes hot on the heels of research by Strutt & Parker, Stanhope and Network Homes stating “The UK private rental market is going through a period of sustained growth, doubling in size to 5.4 million from 2001 to 2014, a trend which only looks set to continue…the Private Rented Sector has grown by 82% over the past 10 years…to become the second largest tenure.”
The statement includes something of a potential double-hit for the sector as the banning of lettings agents charging fees to tenants could see those costs passed onto the landlords.
However, agents fees payable by tenants were banned in Scotland in 2012 and market research by Shelter has indicated that rents have not been increased by landlords as a result. Competition increased between agents, allowing landlords to shop around for the best deal, so it remains to be seen whether it will have a real impact on the market.
The SDLT surcharge is oft-cited as an obstacle to investment being made in the sector at a greater rate than we’re currently experiencing.
The Chancellor has missed the opportunity to give the kick start to the build to rent sector that so many have been waiting for.
We will have to wait and see as to the impact of the ban on lettings agents fees for tenants. On the face of it the costs could be passed onto landlords instead but professional landlords have a degree of buying power with the agents and the cost may be off-set by the extra entrants to the rental market encouraged by the banning of fees.