The additional rate of document duty of 2% was implemented for properties which were not intended to be the purchaser’s principal primary residence in 2022.
Policy & Resources has been reviewing the policy.
It comes against a backdrop of sharply rising rents and landlords leaving the market.
‘Published data on the private rental market indicates significant signs of stress, with rental prices continuing to rise at a rate exceeding headline inflation, despite a substantial real-terms decline in purchase prices over the last two years,’ P&R said.
‘Individuals residing in the private rental sector are particularly vulnerable to housing insecurity, as they do not benefit from the stability associated with home ownership or access to social rented accommodation.’
A consultation with stakeholders was held, and it was found there was a clear mismatch between supply and demand in the private rental sector, which was driving up rents.
‘A complex range of factors continues to constrain the supply of private rental accommodation, one of which is the additional barrier created by the application of higher rates of document duty to individuals seeking to enter the buy-to-let market,’ P&R said.
‘At the core of this issue lies an overarching shortage in housing supply, which remains one of the highest priorities for this States to address. However, Policy & Resources is conscious that addressing this requires time and is proposing the removal of the additional rate of document duty with the aim of alleviating any additional stress that this measure causes on an already challenging market.’
The move could see a reduction in revenue of about £700,000.
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