The property industry has urged the government not to use taxes to stifle the growth of what is quickly becoming one of the most important arms of the rental market, and will aid growth of the sector for years to come.
In the first few weeks of the New Year, announcements of development intentions from a number of large firms have shown that there is real potential for the build-to-rent sector to become pivotal in delivering the requisite number of homes to meet demand in the private rented industry.
However, there remain fears that property taxation laws could damage intentions moving forward, and property industry insiders have moved to urge the government not to hinder the growth of the sector, saying that large scale developments should be exempt from tax laws.
The British Property Federation said the government needs to give absolute assurance that large developments will not be put at risk from the stamp duty levy that has already been announced for smaller investors in second homes. It said if this happens, the risk is that much needed funding for new housing could be lost.
This comes just days after it was revealed by Savills that the UK needs more than a million new residential homes over the next five years to simply meet demand from new tenants coming into the rental market.
The British Property Foundation revealed that in the last few months, there has been a real swell in the number of developments for the rental market in planning. At the moment, 30,000 homes are in the planning stage in the rental sector, compared to just 21,000 in October, representing a rise of 47 per cent in the last few months alone.
“Since the start of the year, there has been investment in the build-to-rent sector on a scale that we have never seen before. Following the changes that were made to [stamp duty land tax] 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,” said Melanie Beech, British Property Foundation chief executive.
At the moment, an exemption from stamp duty levies for large scale investment in the rental sector has been proposed, but as the new tax gets ever closer to its April launch, the sector is calling for absolute clarity and a guarantee that the build-to-rent market will not be put at risk.
If the proposed changes go through, large scale and individual investors will be affected by the changes. Many investors have attempted to get their sales pushed through before the higher rate of tax is applied.
Commenting on the changes, Jerald Solis of Experience Invest said: “…we have seen a slight rush of sales from clients who wish to invest in buy-to-let property before the new stamp duty rates are introduced.”
Buy-to-let property transactions have risen since the government’s announcement however, it is yet to be seen how the market will adapt to these changes.Google+