A major house builder has blamed, in part, recent tax increases on private landlords as a reason for not increasing its housebuilding. Berkeley Group has announced that a fall in demand by domestic buy-to-let landlords was one of a number of reasons why it would be impossible to boost housing supply, beyond its current plans. It cited especially the decision to restrict mortgage interest relief to the basic rate of income tax and the 3% stamp duty levy on the purchase of new homes to rent out.

As reported last summer, the new stamp duty land tax (SDLT) rates for second homes, which came into effect in April 2016, raised an extra £2bn in tax for the government. One accountancy firm found that while the number of property transactions in the UK was broadly the same in the two years to July 2017, SDLT receipts increased by 20% in the second year, equivalent to an extra £2bn in tax.

Berkeley Group stated: “The market conditions in London and the South East are unchanged with home movers and downsizers continuing to be constrained by high transaction costs and the 4.5x income multiple limit on mortgage borrowing, plus the prevailing economic uncertainty.

“In addition, domestic buy-to-let investors, who buy early in the cycle and provide security of cash flow to enable complex, capital intensive developments to be brought forward, are further impacted by additional transaction costs and the removal of interest deductibility.