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You have to distinguish between investment for the buying of existing properties and investment for the building of new properties. The investment is going into the market to—

A number of factors impact the outputs that result from these decisions—

—so, everything else being equal, you would be able to have a controlled experiment and to understand exactly what the impact was. However, you do not have that, because there are all kinds of factors that we could talk about. There is a range of things that impact the decisions that individuals make about investing in properties or whether to enter or exit the market as well as the number of transactions and so on—you name it.

However, we can say fairly certainly that the SFC took a perspective on the impact on behaviour of the previous increase from 4 per cent to 6 per cent but that the data has shown that, if anything, the SFC underestimated the revenue as a consequence of the increase and that there has been less of an impact on the market than was anticipated. That is certainly what the data suggests with regard to that particular point. The SFC then used similar data to make an assessment of the future impact and, obviously, time will tell what the impact will be. You can have a very robust set of data, but all the indications are that, in Laffer curve terms, we are still probably well to the left of the inflection point with regard to ADS.

It is evident that, as a consequence of the increase, the differential between what a first-time buyer and a landlord have to pay will widen, and, therefore, when they are competing against an invest-to-let landlord to buy a property, a first-time buyer will have a competitive advantage. Again, everything else being equal, it is fairly certain that a first-time buyer—or any buyer who is going to live in the property and will therefore not pay ADS—will have an advantage in that regard.

You could argue that. However, as I say, the narrative that landlords are leaving the market clearly is not the case. You can compare that with the counterfactual of what would have happened had the policy not been introduced, but it is not true that landlords are leaving the market. It may be true that not as many are entering the market—I take that point—but, as I said, I do not think that we have data that supports that one way or the other. There is clearly a broader issue around housing supply more generally, but that is outside the scope of this discussion.

It is probably not true to say that it is an unregulated market; it is quite a well-regulated market, but obviously there are policy changes, some aspects of which are around the scope and extent of the regulation. However, as I said, that is outside the scope of this discussion, which is on ADS.

With regard to the impact, as its name says, ADS is designed for additional dwellings, so it covers second homes and properties that are let out. In terms of both of those, making more homes available for buyers who are owner-occupiers is the direction of travel that we are keen to see, to give more of an advantage to first-time and other buyers in the market.

That was quite a roundabout argument. There are lots of things that would impact people’s ability to have the funds to put down a deposit; rent is only one part of that. Other aspects are the cost of living, the measures that we are taking to support first-time buyers, and the increase in ADS, which I think will help to shift the balance in the market in favour of first-time buyers and others who are buying a property in order to live in it.

The argument that you are making is that the landlord is charged the additional ADS, which is then charged to the tenant, who would be unable to pay a deposit as a consequence. I think that the impact of the additional ADS would be diluted in that process and I suggest that there are other things that are probably more significant for the tenant’s ability to compete in the market, if they choose to do so. There is a lot of data on that across the piece, which you could look at, which could help to make that argument.

We have just completed an ADS review that pulled up some specific items, or wrinkles, as you might want to call them, in the system, which we are addressing. An LBTT review is coming up shortly.

Those properties are not going anywhere. If they are not bought by an investor to let, they will be bought by someone who will live in them. If those properties are being bought by someone who is going to live in them, we would not necessarily see that as a negative consequence. The issue of build to rent and investment coming in to add new capacity to the system, which is hugely important, is a separate issue, but it is outside the scope of ADS, because it does not apply to large numbers of properties.

It is important to recognise that the housing market is always going to be a mixed market, if you want to call it that. People will want to buy houses and people will want to rent them, because they want to stay somewhere for a short period of time or because it suits their financial, family or employment situation. There will always be a need for people to rent properties, so a supply of rental properties is obviously important to have in the mix. It is not that we want everybody to be a property owner; it is about recognising that there is a mixed market and understanding what policy measures we can take that are best suited to ensuring that the market is well balanced.

The measure, which supports first-time and other buyers to live in properties by giving them a competitive advantage, is the right thing to do. It fulfils a policy objective and raises additional revenue, which is clearly welcome, but there is no end game in the sense that we do not want to significantly alter the market in terms of the number of rental properties versus the number of owner-occupied properties.