Property investors should be exempt from the 3% Stamp Duty surcharge, according to the Better Renting for Britain campaign.
The group, comprising of some of the country’s biggest investors in the private rental sector, has written an open letter to the Housing Minister, Brandon Lewis, calling for exemption from the extra Stamp Duty for buy-to-let landlords and second homebuyers, which was introduced on 1st April 2016.
Institutional investors, who have been investing large sums in Build to Rent schemes, were shocked to hear in Chancellor George Osborne’s last Budget statement that they would also be included in the Stamp Duty hike.
The Better Renting for Britain campaign’s letter, signed by 11 companies, proposes a three-point action plan that would deliver more than 250,000 extra homes for rent, which would help the Government provide the million homes it has pledged to build by 2020.
Signatories to the letter include: Grainger PLC, Essential Living, LaSalle Investment Management, HUB, Fizzy Living, Real Star, Hermes Investment Management and Mishcon de Reya, a leading City law firm.
The CEO of Essential Living, Martin Bellinger, says: “Until we face up to the fact that promoting homeownership at all costs will lead us nowhere, Britain will not overcome its housing shortage. The Housing Minister has been very supportive of Build to Rent, but what’s crucial is that the Prime Minister and Chancellor recognise the contribution this could make to helping them keep their promises on building a million homes by 2020.”
Helen Gordon, the Chief Executive of Grainger PLC, insists that it is vital that the Government does all it can to help housebuilders develop more homes: “Our vision is for a better rental market, underpinned by good value for money for our customers, supporting economic growth and housing supply. We are looking to invest hundreds of millions of pounds into new rental homes, designed specifically for renting, which we will directly manage for many years to come.”
Success in the US, German and Dutch markets shows the potential for a thriving Build to Rent sector here in the UK, which could easily reach £75 billion, according to Chris Taylor, the Head of Private Markets at Hermes Investment Management.
He continues: “Crucially, this investment will typically be long-term institutional programmes committed to providing institutional quality and professionally maintained, purpose-built rental blocks. Designating sites as suitable for Build to Rent in local plans, as well as identifying public land sites, will greatly assist new supply.”
The letter, addressed to Brandon Lewis, reads:
How Build to Rent can help you build more homes, faster
You have asked in recent months whether Build to Rent (BTR) should receive a new use class. As active BTR developers and investors, this is not a priority at present.
However, BTR has a vital part to play as part of a more holistic approach to building more homes, faster. With conventional housebuilders at full capacity, supporting a professional rental model can secure £50 billion additional funding (equivalent to 250,000 new homes).
Attracting this new money from global institutions will ensure professional rental homes can be built alongside owner-occupied units.
Long-term institutional capital will help reduce price volatility and will help free up family homes and speed up regeneration. Experience across the US and Europe shows how this can work and we see three key routes to achieving this.
First, a mandate that a set proportion of sizeable public land sites suitable for more than 100 units be designated for long-term rental (Build to Rent) homes, with a presumption in favour of planning consent. This is especially important for planned commuter hubs. Local plans should also stipulate a minimum number of market rent homes.
Second, we urge that you keep the promise made by the Chancellor in December 2015 to not levy the Stamp Duty surcharge for second homes on professional Build to Rent investors. This tax further widens the viability gap between Build to Rent and the owner-occupier market. The tax will reduce investment into the housing market and it will reduce housing supply. As an emerging sector with so much potential to deliver the investment we need to build homes, it is significantly damaging to impose this additional 3% levy on long-term Build to Rent investors. This damaging tax change could result in many thousands of homes not being built.
Third, provide greater recognition of Discounted Market Rent (DMR) as a form of affordable housing, specifically for Build to Rent developments. DMR has already been accepted in boroughs such as Brent, Ealing and Greenwich, but a clear nationwide policy here would accelerate the planning process and signal to investors the Government’s support for this sector. Above all, it would mean more affordable housing.
More generally, we’d welcome the chance to work with your department to help give professional Build to Rent a more public focus, so that councils and planners do not continually see renting as stigmatised and feel confident in being able to promote Build to Rent schemes.
The Better Renting campaign has been created to offer a focused, public voice to the emerging Build to Rent sector. We would be happy to convene a meeting of our group with your officials and several informed council representatives to flesh out the above ideas to ensure they are fully workable in practice.
The Better Renting Campaign
Do you support the campaign’s call for exemption from the 3% Stamp Duty surcharge?
We have a guide on how the higher tax rate will affect you: https://www.justlandlords.co.uk/news/landlords-guide-stamp-duty-surcharge/