The chancellor Rachel Reeves has just announced in her Budget statement that the stamp duty surcharge on additional homes will increase by 2% from tomorrow.
Consequently, the stamp duty surcharge will rise from 3% to 5% which will hit landlords’ profits, and that is likely to deter more people from investing in the BTL market and thus potentially reduce further the supply of much-needed private rented stock.
Faye Church, senior financial planning director, Rathbones Group said: “The decision to increase stamp duty land tax from 2% to 5% from tomorrow will have an impact on the private rented sector. Assuming an average holding period of 10 years, this would add £4,780 to the cost of buying an average UK flat or maisonette which costs around £239,000 according to Land Registry data. Designed to be a tax on the wealthy, it is in fact the opposite; landlords are likely to pass this on to tenants costing them extra rent of £40 per month or £480 per year.”
Lucian Cook, head of residential research at Savills, commented: “Any relief buy-to-let landlords and second homeowners may have felt from seeing their exposure to capital gains tax unchanged will have been very short-lived given an increase in the SDLT surcharge.
“The risk is that it further constrains the supply of private rented accommodation, keeping upward pressure on rents. New buy-to-let investors will be very thin on the ground, and even existing larger, wealthier, landlords, will think very carefully about whether they continue investing.
“That means there will be a thinner seam of demand and fewer options for those looking to exit the sector.”
The CEO of OpenBrix, Adam Pigott, added: “An increase in stamp duty on second home purchases will leave a sour taste, as it will see an increase in costs for those looking to invest within the sector, although it’s unlikely to deter them from doing so.”
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