Stamp duty and residential REITS – what a week!

Awkward conversation with two friends yesterday, one had just completed his house sale and the other was delayed. Lucky sod having it delayed as it saved him a few thousand, unlucky the former.

The Autumn Statement brought a few bits of good news – housing benefited with the announcement of 13,000 homes in Bicester and of course from yesterday, stamp duty was reduced for 98% of the UK and the remaining 2% can probably afford it. This is a very positive move and certainly helps individuals get a foothold on the property ladder. But is it all really smiles and cheers this festive period. Based on the average house price you are looking at saying about £4,000 on stamp duty. That does not solve the problem of the deposit, which for some people can be four times that amount.

The problem is that housing/residential is booming across the UK and this is evident from the Mill Group preparing to launch a residential REIT. This is a new concept, untested in the market place. It certainly does sound interesting, but couple this with how it is funded – crowdfunding! Talk about reaching a wider investor base.

I discussed the concept with a couple of bankers who made it clear, they would struggle to lend to a residential REIT until they are proven – so why would you not use crowdfunding, it makes sense and provides people a place to put their cash where it earns more than in a bank account. My first pondering was that the money would be used to development stock in areas with demand, however they have taken the route of buying stock already out there. It’s a good start.

As the REIT prepares to list, with an ambition of raising £50m to invest and 10% share return, I want it to succeed but at the same time not. I like the UK for its “buy” mentality, people own their homes. The more European model of renting makes me wonder what do you leave behind when you leave this world.

I’d love to hear your thoughts on a residential REIT and stamp duty.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend,

Lee

Follow me on Twitter

Connect with me on LinkedIn