The new tax on second properties could lead to higher rents and a slowdown in the buy-to-let market, according to the Council of Mortgage Lenders (CML).
Days before HM Treasury ends its consultation period on the Stamp Duty Land Tax (SDLT) proposals, the CML has publicly criticised the plans, claiming that they will have a negative impact on the UK’s housing market.
The new proposals require homeowners to pay a three per cent surcharge on any second property, even if that second property is a main residence. However, the CML has warned the new charge could keep investors at bay, leading to a decrease in privately rented property or an increase in existing rents.
The trade association has also suggested the stamp duty payment should be deferred for 18 months for homeowners who are part of a property chain, so they're not caught out by unforeseen delays.
Paul Smee, the CML's director general, said:
Given the complexity of the proposals, we suspect that in practical terms the surcharge could cause more problems than it solves.
We urge the government at least to move away from a position where people will have to pay and then potentially claim back to one where payment is deferred, and only triggered if the buyer genuinely falls into the intended target category.
The stamp duty proposals were made public on 28 December 2015, and are open for consultation until 1 February 2016. During this time, individuals, companies, legal professionals, representative and professional bodies may raise concerns or offer alternate suggestions, before the government formally announces its plans in the Budget on 16 March 2016.