Property industry urges sensible SDLT regime, as new figures show over 30,000 build to rent units have planning permission

2 Feb 2016

Policy area: Residential, Tax & Finance

The property industry is urging Government to protect large-scale investment in residential property from a proposed higher rate of Stamp Duty Land Tax (SDLT) for purchasing additional homes, or risk losing much-needed investment in new housing. 

In its response to the Government’s consultation on levying a three per cent SDLT surcharge on purchases on additional residential properties, the British Property Federation (BPF) has warned that the higher rate of tax could cancel out the progress that the build to rent sector has made since 2011, when changes to SDLT bulk purchase rules were brought in. 

New figures[1] released by the BPF show that there are now over 30,000 build to rent units with planning permission in the UK, a 47% increase since October, when the BPF calculated there to be 21,000 units with permission.

The BPF has noted that since the turn of the year there have been significant build-to-rent investment announcements made by the sector, these include:

  • Grainger plc pledging to invest £850m in the private rented sector by 2020.
  • Legal and General working with Dutch pension fund PGGM to deliver a £600M build to rent investment plan.
  • Greystar Europe Holdings, one of the USA’s biggest housing investors, announcing the acquisition of a 26.5 acre site in Greenford, West London, on which it will develop the UK’s largest purpose-built rented housing scheme.  
  • A £1bn pledge from RBS in lending to the build to rent sector.
  • LaSalle Investment Management making significant in-roads into their plans for at least £500m of build to rent investment.

The organisation recommends introducing a simple portfolio test to exempt institutional investors with 15 or more units in their portfolio from the additional tax.

Melanie Leech, chief executive of the British Property Federation, commented: “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 SDLT 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. 

“There is cross-party support for new housing and a better quality rented sector, and we would expect Government to recognise the impact that the SDLT surcharge might have on investment in new homes, and the creation of a better quality rental product.”

Andrew Stanford, UK residential fund manager at LaSalle Investment Management and chair of the BPF’s Build to Rent Committee, said: “LaSalle intends to provide good quality, built to rent homes across the country for customers on their journey to home ownership or for customers who want the flexibility and security of renting a home with a long-term institutional landlord.

“We were encouraged by the proposed exemption for large scale investors from the additional 3% SDLT charges. If the exemption was not implemented it would have a significant negative impact on our ability to invest in the nascent build to rent sector.”

Harry Downes, managing director of FizzyLiving, said: “The professional private rented sector has the skill, experience, commitment and funding to make a substantial contribution to the Government’s housing target, and the 15 unit exemption recommendation will ensure that professional management standards remain viable.”

Adam Challis, head of residential research at JLL, said: “The build to rent sector has a real opportunity to professionalise, improving both the quantity and quality of private rented properties. The 3% SDLT charge would undermine this once in a generation opportunity to give renters a better deal.”

ENDS

[1] Figures taken from the BPF's Build to Rent Map of the UK