Went to a seminar this week on sourcing homes for investors to buy who are keen to jump in before the Stamp Duty changes come into effect at the end of the first quarter. There was a good deal of positive sentiment amongst the audience for Bitex Home, and the owner, Hemi Tanna, did a great job of bringing new options to the table. There, that’s a plug for a competitor in one sense, but in my view anything that aids the professional development of landlords and helps us run more effective investments can only help the industry, for both landlords and tenants alike.
Hemi’s key point was that the Stamp Duty hike does not affect the absolute returns that a landlord makes so badly that any investor should be put off – there are ways to look at the effect on return on capital employed that remove the impact. Principally this would be by raising the rent to a level where the returns are the same as before the stamp duty hike was included. And before tenants (understandably) scream foul, there is the positive knock-on that more investors equals more properties to let equals less upward pressure on rent in the long-term.
For landlords, don’t forget that Stamp Duty is an allowable expense to set against the capital gain that you eventually declare when you have to sell; that’s looking at the long game, of course, but do bear it in mind if you fail to beat the tax deadline. In effect, it’s just an advance payment of CGT.
To top off the positivity, here’s a fascinating interview that Rupert Chapman gave to one of our favourite industry sages, Vanessa Warwick of Property Tribes. His upbeat contra-analysis of the impact of the Autumn Statement is an object lesson in finding silver linings. https://www.youtube.com/watch?v=GMmsNFXKxqk
Remember, both landlords and tenants benefit when professional standards are applied to an industry that is encouraged to grow to meet demand; I’m not of the view that the Chancellor has got this right in strategic terms, and I guess he is basically following Conservative dogma in pressing for wider home ownership, which is laudable and a real necessity but countered by simultaneous blunt instrument management like the MMR (Mortgage Market Review) rules which make it so difficult to acquire a mortgage in the first place. So in this time of huge complexity for landlords and investors it’s good to see some interestingly positive notes out there.