Anyone waking up today who is planning or close to purchasing a second home may well feel as if an April fool's trick has been played on them.
Whether helping a son or daughter get onto the housing ladder, investing in a buy-to-let property or buying a holiday residence, from today an additional three per cent of the entire purchase price will be levied on buyers of any property that is not classed as their main residence.
Purchasing an “average” London property, which according to the Land Registry now stands at £530,368, as a second home today costs almost £16,000 more in stamp duty than it would have done yesterday.
While supporters might see this tax on second homes as the latest in a string of government initiatives to “unlock” the housing market for first time buyers, there are a number of flaws to this argument.
Following on from the damaging stamp duty changes announced in late 2014 that saw rates increase dramatically for buyers of prime and super-prime properties, the levy on second homes has similarly dented investor confidence.
The chancellor’s decision last week to deny large-scale investors an exemption from the surcharge on additional residential properties was another blow, as was the surprise hike in stamp duty rates on commercial properties worth over £250,000.
The build to rent sector, which has recently gathered momentum, may be negatively impacted.
Those building up a residential or commercial rental portfolios as a pension strategy will certainly see the cost of building those portfolios rise and may scale back their investments - with a potential knock on impact on rents, and a clear conflict in other government strategies aimed at ensuring we all plan adequately for retirement.
Against this inherently volatile backdrop, both domestic and foreign buyers and investors will be wondering: what next?
Yet, all the analysis of the impact of this latest round of unhelpful taxes detracts from the real issue holding the UK housing market back: the acute supply shortage.
The government has set out to address this in a number of ways, but what is lacking is the clarity, certainty and predictability required to attract the investment the UK property market needs.
While incentives to build housing for first time buyers, Help to Buy, Help to Buy ISA’s, etc are undoubtedly positive, this should not come at the expense of other parts of the market including prime and super-prime, residential and commercial rental investment segments.
Indeed, it is a fool’s game to think that a properly functioning market does need all aspects of the market to be buoyant and that a loss of confidence in one segment will not translate into harming the market in general.
So on this day of all days, the government would do well to resolve to stop tampering with property taxes, as much to protect its own revenues, as to give all buyers the ability to forward plan and buy with confidence.