Last year we saw the UK Index house builders have a good few days following George’s autumn statement in which stamp duty reforms were announced, and stamp duty was again part of this year’s statement. House building stocks were all well in the blue before the Osborne took the stage but quickly retraced half their gains whenhe said that stamp duty on buy-to-let property would run at 3% above normal. However, it wasn’t long before those retracements themselves were largely retraced! Why? Cynicism, I reckon.

‘Making things more expensive’ has long been the go to tactic used by government to stop people doing things. You know, like smoking and drinking which no-one does anymore because of the expense involved. Or driving cars like Volkswagens and Audis that give out environmentally damaging emissions, which of course no one does any more. Or going to university, which absolutely no one does these days. Now, of course, people will stop buying houses with the intent to let them out.

The problem with ‘making things more expensive’ is, of course, that it doesn’t stop people buying them.

Increasing stamp duty is not going to dissuade people from doing buy-to-let. They’ll just pay the increased stamp duty and you may notice rents increasing as a result. The upshot of this is that demand will not be affected. There will still be first time buyers in the market along with second and third time buyers. All that will change is that those who rent will pay more to do so. In fact, you could even argue that it is now definitely a better idea to buy a house to live in rather than renting one – but get that mortgage application in quicksmart!

As an investment, however, wouldn’t you like to know how you can swerve stamp duty altogether? Here’s the thing – if you want to buy a £200,000 house as an in

vestment, it’ll cost you £1,500 in stamp duty. Let’s say you need a deposit of 10% to secure a mortgage – that’ll be £20,000. So a £21,500 deposit (excluding unwieldy estate agents’ and solicitors’ fees, of course) has got you into a nice £200,000 house. You’ll make monthly payments on your mortgage, with interest, and when you sell it you’ll either bank a profit or a loss. Of course, it’s unlikely you’ll have put anything like as much as £200,000 into the transaction by the time you come to sell – you’ve used the concept of leverage.

Alternatively you could just pay rent and invest your deposit in one of the UK’s house builders. Assuming you’ve got £21,500 in the bank ready to invest, using CFDs you could gain exposure to £21,500 worth of shares with as little as a 5% deposit, or £1,075. Stamp duty is currently zero for CFDs, since they are a derivative product. So for this equivalent investment, the initial outlay is £1,075 plus whatever your monthly rent payments are and a small commission – typically much lower than what you’d have to pay the estate agent. We’re talking less than £100. Less than £50 actually. There are no solicitors’ fees to pay or annoying estate agents in cheap, badly fitting suits to deal with. When you come to sell, you’ll bank a profit or loss based on the full £21,500 worth of exposure but having put up a fraction of that amount up-front – remember that word leverage?

Take a look at a chart of a UK house builder and see where they’ve come this year alone! Could the trend be set to continue? George Osborne has carefully amended stamp duty so that it shouldn’t adversely affect the housing market; with said market buoyant as ever and house builders’ shares off their 2015 (all-time) highs, there may be returns every bit as good to be had in 2016. If there’s confidence in the price of property, there should be confidence in people who build it.

I so often hear people say ‘bricks & mortar mate,  it’s the only way.’  But the reality is that, ignoring short term volatility of course, it’s neither more nor less sure-fire than investing in property-related stocks. The latter may even be more cost effective.