Chancellor advised to abolish stamp duty surcharge on additional homes

The government should aim to stimulate housing market activity and help boost the supply of new homes by scrapping the 3% stamp duty surcharge for people, including buy-to-let landlords, purchasing additional properties, new research shows.

According to analysis by Capital Economics, scrapping the stamp duty surcharge would boost housing market activity by encouraging investors to invest in properties and that would in turn help meet the growing demand for rental homes and drive up transaction levels.

The economic consultancy believes that removing the 3% levy would see almost 900,000 new private rented homes made available across the UK over the next ten years.

Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past few of years, which partly explains why so many people are exiting the BTL market and thus reducing the supply of much needed private rented stock.

The government’s draconian tax changes have not just pushed a number of BTL landlords out of the PRS, but have also left prospective tenants in some parts of the country with little alternative but to bid against each other, pushing rents up in the process, as a result of falling housing supply.

Given that renting privately is the first housing tenure most young people enter when they leave home or university, demand will only increase as the 15-24 cohort in the population is forecast to grow between now and 2030 by 866,000, or 11%.

Rishi Sunak
Rishi Sunak

Capital Economics suggests that without changes in tax or other policies, the private rented sector stock will decrease further by over half a million properties over the next ten years.

But it says the government could reverse that trend and benefit to the tune of £10bn through income and corporation tax receipts if it scrapped the stamp duty levy on the purchase of homes to rent out.

Also, Capital Economics notes that these revenue streams would continue over the decades that follow, so long as the landlords do not later sell all these properties.

The National Residential Landlords Association (NRLA), which commissioned the research, calls on the Rishi Sunak, the chancellor, to adopt this proposal amidst a chronic shortage of homes to rent, when he delivers his spring statement to the House of Commons on Wednesday 23 March.

Ben Beadle, chief executive of the NRLA, said: “The government needs to wake up to a crisis of its own making. Taxing landlords out of the market serves only to cut supply, increase rents and make home ownership more difficult to afford.

“The evidence clearly shows that the supply of rented housing is declining as demand increases and will continue to do so. The government is taking a blinkered approach to the issue, which is not helped by its reluctance to admit mistakes it has made in the past.

“It makes no sense to tax the supply of new homes supplied by landlords investing in new build or bringing empty homes back into use. As this study indicates, removing the tax will actually generate more revenue, not less.”


Homesearch EOS

Email the story to a friend


  1. Robert_May

    The housing crisis is caused by there already being too many long term investors in property, people who buy homes and then   only release them  back to the market when interest rates rise and the inverse pyramid topples over.  ( see 1991-1994)

    Think  of the 3% as small price to pay for denying generations the chance to buy a home; investors recoup the 3% in under a year through capital growth so realistically it’s hardly a  burden that should break the bank or put any professional investor off investing

    1. Woodentop

      Those rich enough, do not give two hoots for the tax they pay and continue to buy second homes. Tax regime failed.


      Those that wish to become landlords ……. matter of principle for many will not entertain paying the tax and that was the governments intent but shot themselves in the foot with rental housing crisis. Added to the reduction in rental properties. Tax regime failed.


      Those that wanted to help buy a property for their children use, as they can’t afford house prices, struggle to find the tax. Tax regime failed.


      And they were warned this would happen.

    2. Mark Connelly

      The housing crisis is caused by not building enough houses for the past thirty years. Look over there gov it’s them investors wot did it to us is totally disingenuous.

      1. Robert_May

        No one is blaming investors for  replacing low yield investments and annuities with secure  capital growth property investment that provides an income,  that’s an inevitable consequence of a low interest rate economic policy.

        Government is trying to squeeze private investor landlords out of the sector- they spoil the  supply for institutional investors and deny people homes to buy.

        when Interest rates rose and lending criteria  tightened in the early 90’s some private portfolio landlords got caught out, there were a lot of repossessed portfolios, its not hard to see that happening again. No-one felt sorry for those landlords and there’s not much sympathy for  Landlords now


        As for not building enough homes,  there have  been a lot of homes built but  too many have gone to housing associations, build to rent and buy  to let because those are simple no chain sales to people  not struggling with affordability.

        Economic policy is at odds with political rhetoric it won’t be solved by us or a relatively few landlords saving  a tax penalty  to enter the industry or grow their portfolios

      2. janbyerss

        The housing crisis has been caused by too many people

  2. frankmoran123

    Too many people on both sides of the market. Feel bad for all the new renter tenants.


  3. wizriz

    It’s not just landlords who get hit with the 3%. People who are going through separation and divorce also get clobbered. Of course the government will say that there is a 3 year period to recover the duty, but (i) stumping up the cash for the stamp duty on top of divorce fees is hard (and cruel), and (ii) in practice many people are left footing the mortgage bill for their ex long after the 3 years are up, and as long as they are on the deeds for 2 properties they cannot claim the duty back.

  4. Lrichie14

    Absolutely Not!!! They should pay more stamp duty to own more properties Buy to let investors make enough money ! Government should make it easier for people to buy there own homes

    1. AcornsRNuts

      That you, Alicia?  By the way it is their, not there.

    2. AgentofEstates

      That’s not the reason for the change though, they need to give an incentive for investors so that in the long run it helps tenants with more choice for houses and not crazy high rents

  5. Radon King

    Rishi Sunak has already lost my vote for extending the Stamp Duty Holiday.

    However, I can categoriclly say that the Conservatives will permanently lose my vote if they remove Stam Duty tax on BTL and second properties.

    1. wizriz

      While I undersatand (if not agree with) the sentiment against BTL, there is a problem with the extra duty on second homes in that it does not take into account the reason for having a second home. Not all second homes are holiday homes or BTLs. Here are some other examples:

      – Someone who spends a lot of time working away from home. Very common with city workers to have a small flat to use during the week, while their family home is much further away.

      – Separating / divorcing couples, where one partner is on a high income and the other has very low income. The high income partner often ends up on the deeds for two properties because the lower earner cannot get a mortgage.

      – Buying a home for an elderly relative who is in financial difficulty – again the mortgage lender will want the mortgage account holder to be on the deeds of the property.

      There are other cases. ANd that is the problem with making tax laws complicated – they always adversely impact minorities who were not intended as the target, but end up getting hit harder when they have enough problems on their plate.

      1. AcornsRNuts

        Well put, wizriz.  The second home stamp duty is nothing other than the politics of envy, created by those who don’t want others to make as much money as they have and supported by those who are just plain jealous.  Similarly charging doubl or even treble council tax when a property is vacant is blatant disscrimination.  No account is taken of why the property is empty,  Years ago I refurbished a flat before letting it.  There was no kitchen, not even a sink and the only source of water was a hand basin in the bathroom.  The council tried to charge me council ta even though I told them it was not habitable.  They disagreed until I sent photos of the non-existent kitchen to their environmental health department asking if it was ok to leet it in that condition.  The council changed their mind.


You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.