The property industry is urging the government to protect large-scale investment in residential property from a proposed higher rate of Stamp Duty Land Tax (SDLT) or risk losing much-needed investment in new housing.
The British Property Federation (BPF) has warned that the higher rate of tax could cancel out the progress the build-to-rent sector has made since 2011 when changes to SDLT bulk purchase rules were brought in.
New figures released by the BPF show there are over 30,000 build-to-rent units with planning permission in the UK – a 47 per cent increase since October when the Federation calculated 21,000 units with permission.
The BPF has noted that since the turn of the year there have been significant build-to-rent investment announcements made by the sector, including:
- Grainger Plc pledging to invest £850 million in the private rented sector by 2020.
- Legal and General working with Dutch pension fund PGGM to deliver a £600M build to rent investment plan.
- Greystar Europe Holdings, one of the USA’s biggest housing investors, announcing the acquisition of a 26.5 acre site in Greenford, West London, on which it will develop the UK’s largest purpose-built rented housing scheme.
- A £1bn pledge from RBS in lending to the build to rent sector.
- LaSalle Investment Management making significant in-roads into their plans for at least £500 million of build to rent investment.
- The organisation recommends introducing a simple portfolio test to exempt institutional investors with 15 or more units in their portfolio from the additional tax.
Melanie Leech, chief executive of the British Property Federation, commented:
“Following the changes that were made to SDLT a few years ago, investment in the sector has really taken off, and it is great to see pension funds and other institutions now investing heavily in housing.
“There is cross-party support for new housing and a better quality rented sector, and we would expect Government to recognise the impact that the SDLT surcharge might have on investment in new homes, and the creation of a better quality rental product.”
Andrew Stanford, UK residential fund manager at LaSalle Investment Management and chair of the BPF’s Build to Rent Committee, said:
“We were encouraged by the proposed exemption for large scale investors from the additional 3% SDLT charges. If the exemption was not implemented it would have a significant negative impact on our ability to invest in the nascent build to rent sector.”
Harry Downes, managing director of FizzyLiving, said:
“The professional private rented sector has the skill, experience, commitment and funding to make a substantial contribution to the Government’s housing target, and the 15-unit exemption recommendation will ensure that professional management standards remain viable.”
Adam Challis, head of residential research at JLL, said:
“The build to rent sector has a real opportunity to professionalise, improving both the quantity and quality of private rented properties. The three per cent SDLT charge would undermine this once in a generation opportunity to give renters a better deal.”