BTL stamp duty changes: the industry reacts

Landlords and property experts have continued to express their anger at changes to the stamp duty regime announced in the Autumn Statement. Some warned that rents will increase as a result of the changes.

Chancellor George Osborne announced on Wednesday that buy-to-let and second home properties will be subject to an additional 3% stamp duty from next April.

Jeremy Leaf, former RICS chairman and north London estate agent, described the move as “demonstrating practical naivety”.

“Many buy-to-let investors underpin some of the bigger developments in particular. There is a danger that it will kill the market and result in some developments not happening at all,” he said, “Landlords will either sell or not add to their portfolios at a time when we need more affordable accommodation. Such a move inevitably puts extra upward pressure on rents.”

Jamie Lester, head of Haus Properties, agreed that the stamp duty hike could have a negative effect on the rental market.

“This may ultimately lead to a shortage of good quality properties or an increase in rent, which could make it much more difficult for tenants,” he explained.

The 3% surcharge charge on all stamp duty bands above a £40,000 starting level will more than treble the bill for landlords buying a £275,000 rental property – hiking it from £3,750 to £12,000.

Some industry pundits have warned that the move could distort the housing market, with a rush of buy-to-let and second home purchases before the start of April – pushing up prices.

Doug Crawford, CEO of My Home Move, said: “The stamp duty changes will turbo-charge the housing market over the next four months as buy-to-let landlords and holiday home buyers race to beat the deadline before the changes bite in April. This will inevitably push up property prices in the short term, especially in locations popular with buy-to-let investors, such as London.”

Budget small print revealed another attack on landlords: From April 2019 any Capital Gains Tax due on the sale of a residential property will need to be paid within one month of completion.

Ray Boulger, senior technical manager at mortgage broker John Charcol, described the CGT change as a “small, but additional, attack targeted at BTL landlords”.

Boulger warned the “triple whammy” of income tax changes announces in the last budget, SDLT increases announced in the Autumn statement and expected lending restrictions from the Prudential Regulation Authority next year, will result in less landlord purchases and more landlord sales of existing buy-to-let properties. He said that unless enough tenants can afford to buy a home this will push up rents.

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