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An uncertain gift for buy-to-let

8th August 2008 | back to article listings BACK    print this article PRINT

Ever since chancellor of the exchequer Alistair Darling was interviewed on Radio 4 early this week, talk has been rife about the prospect of a stamp duty holiday being introduced. Stakeholders in the property industry expressed their approval, albeit with the caveat that they would still like to see other action taken, such as more liquidity added to the market.

The problem, however, is that Mr Darling was talking about what may happen in the pre-budget statement, which is not due until November. He neither confirmed nor denied that a stamp duty holiday is in the offing, which has created uncertainty.

In the meantime, great uncertainty has arisen, leading to criticism from both the industry and political opponents, including people such as shadow chief secretary to the Treasury Philip Hammond, who accused Mr Darling of playing "damaging short-term games", while the Home Builders Federation told the Financial Times it did not want to wait until November to find out what the government is planning.

It said: "If this is to be debated in public for too long, clearly it could be detrimental to the market in terms of making people think about whether to proceed with a transaction." Mr Hammond took the same view.

In an attempt to quieten the talk of a stamp duty holiday, the Treasury has issued a stern denial that any clear decision has been made over stamp duty, describing such stories as "simply wrong" and adding: "These stories are based on speculation."

Meanwhile, housing minister Caroline Flint, appearing on the BBC Newsnight programme, admitted that stamp duty was one of the options under consideration but insisted the government would not be pushed into any announcement before November. So the uncertainty remains.

If the effect of this is that the speculation continues and would-be homebuyers sit on their hands and wait to see if November will bring good news and lower upfront costs, the number of transactions will fall significantly. But for buy-to-let investors, this could be good news. Just as more people are renting now rather than buying because of the credit crunch and its effects, so a further disincentive to buy will mean that over the next three months more will continue to rent.

Seamus Kavanagh, the managing director of property firm Badger Holdings, said today that at one of the firm's offices five people have already put their house purchases on hold. He accused the government of leaving the industry and public alike "completely in the dark and confused". But while this situation may cause problems for one sector of the property industry, it could be a bonus for landlords.

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