Autumn Statement – How will the Stamp Duty increase affect Buy to Let Landlords?
Last week the Autumn Statement was released, and amongst all of the other details, Chancellor of the Exchequer George Osborne announced major changes to the UK’s stamp duty tariffs. A whopping 3 percent surcharge will now be levied on all buy to let property purchases and transactions involving the sale of a second home above a £40,000 starting level. This marks a trebling of the previous surcharge, and not everyone is pleased with this new policy.
Osborne has been firm in his decision to triple the stamp duty, doing little to hide his contempt for buy to let landlords who many blame for the increasing rents and property values in cities across the UK. During his announcement, he stated:
‘Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy. So I am introducing new rates of stamp duty that will be three per cent higher on the purchase of additional properties like buy-to-lets and second homes.’
Osborne also expressed his belief that this new increase will raise over 1 billion pounds for the treasury by 2021, making this a lucrative new tax indeed.
What will this mean for those wanting to purchase a second home or buy to let property?
To put it plainly, this move has been called “a catastrophic news for the private rental sector’ by David Cox, the head of the Association of Residential Letting Agents.
The new stamp duty will be charged in three bands, rising from one to three percent depending on the value of the home. As the financial website This is Money has calculated, this new rate means that the “stamp duty bill for a £275,000 property will rocket from £3,750 to £12,000.” In terms of buy to let properties, for an average purchase of £184,000, buyers and landlords will pay an extra £5,520 from April 2016. The BBC has published a comprehensive table that shows how the new stamp duty bands will be calculated.
This is no small chunk of change, and experts are questioning whether this will unnecessarily keep those wishing to invest in property from doing so across the country, and encourage them to buy abroad instead. That said, for many with vast property portfolios, an addition five thousand pounds would not act as much of a deterrent, and could actually be passed on to renters.
A rush to buy before April
Analysts and property experts have warned that this could have massive repercussions across the housing markets of the UK, not least of which many fear will be a massive rush to snap up all available properties in the country before the April implementation date. One thing is for certain – if you are planning to buy any new property over the course of the next year, the time to do so is nigh. Failure to buy before April 2016 will result in thousands of pounds in fees and stamp duty.